ECB's Panetta: Central Banks Need to Clarify Who Gains From AI

Fabio Panetta, a member of the European Central Bank's Governing Council and governor of the Bank of Italy, said on September 21 that central banks need to clarify who captures the gains from artificial intelligence, as the distribution of those gains will affect aggregate demand and inflation. He was speaking at an event hosted by the National Bank of Ukraine.

Panetta said AI is set to reshape productivity, economic growth, labor markets, financial markets and payment systems. If AI mainly creates new jobs and raises households' expected labor income, aggregate demand could rise before the productivity dividend fully materializes, prolonging inflationary pressures. Conversely, if automation displaces workers, weaker consumption could bring AI's disinflationary effects earlier.

He stressed that credibility is a central bank's core asset, and that how it is built and maintained depends on the nature of the challenges central banks face. Panetta argued that central banks cannot stand aside, and that understanding ongoing changes is becoming increasingly important for maintaining credibility.