INTEGRATING ARTIFICIAL INTELLIGENCE INTO CENTRAL BANKING: OPPORTUNITIES, CHALLENGES, AND IMPLICATIONS
Abstract
Artificial intelligence is increasingly being used in a variety of areas, including central banking, to improve decision-making, business efficiency, and risk management. Today, practically all central banks are investigating the use of artificial intelligence in their operations, such as economic forecasting, risk analysis, policy research, and market analysis. All of these can help to increase the financial system's resilience at a time when the global economy is becoming more interconnected and complex. On the other hand, it is vital to highlight the emerging obstacles of artificial intelligence, such as cyber security, data privacy, and algorithm transparency, which central banks must address to effectively utilize the benefits of artificial intelligence applications. When deploying artificial intelligence, central banks should take a thorough and balanced approach, considering the ethical, legal, and social implications while maximizing on all of the benefits that artificial intelligence may provide. Continuous monitoring of regulatory frameworks and international cooperation can assist central banks in realizing the potential of these technologies. In this paper, we will analyze the function of artificial intelligence in central banking. We will examine the benefits, challenges, and risks, as well as the use of artificial intelligence in the operations of leading central banks, with a particular emphasis on its use in Serbia's banking sector.
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