- High-level gatherings among current and former central bankers increasingly focus on artificial intelligence.
- “AI may be already having an effect on wage demands because workers are concerned. They’re insecure about their jobs,” said Donald Kohn, former vice chairman of the Board of Governors of the Federal Reserve.
BEIJING — Artificial intelligence is breaking into the realm of central bankers.
High-level gatherings this month in Asia, including the International Monetary Fund-World Bank Annual Meetings in Bangkok last week and the Bund Summit this week in Shanghai, reflected growing scrutiny on the tech, especially as competition for capital sends many government bond yields to multi-decade highs.
Federal Reserve Chairman Kevin Warsh said in Bangkok that AI was a positive economic “shock” that could “fundamentally” change monetary policy. He noted plans for a hearing on productivity and jobs in the Bay Area on Nov. 16 and has a task force focusing on AI.
Three days later in Beijing, People’s Bank of China Governor Pan Gongsheng spent the last portion of a Financial Street Forum keynote on AI, according to an official transcript. He said the central bank would evaluate the impact of the technology, improve financial support for the AI industry and promote its application in finance.
“The impact of AI on the global economy, on employment, on China, on everything” was at the top of the agenda at the central-banker-heavy Bund Summit, Guo Kai, president of the CF40 Institute think tank, told CNBC on the sidelines of the conference Tuesday.
AI and wages
“AI may be already having an effect on wage demands because workers are concerned” about their jobs, said Donald Kohn, former vice chairman of the Board of Governors of the Federal Reserve System. “We have a situation now where the economy is at full employment, demand is pretty strong, and wages, if anything, have continued to come down in the U.S. in nominal terms and in real terms,” he told CNBC on the sidelines of the Bund Summit.
During upcoming meetings of central bankers and financial regulators at the Bank for International Settlements in Basel, Switzerland, Kohn expects central bankers will discuss AI’s impact on jobs.
Managing spillover
Many Asian economies from Indonesia to China are vulnerable to any downturn in AI demand due to their significant role in the underlying supply chain, Sonali Jain-Chandra, deputy director of the IMF’s Asia Pacific Department, said Tuesday during a fund roundtable.
“This is a very important risk for policymakers to pay attention to,” she said. “And this is why we also say that now is the time to build buffers, fiscal external buffers to make sure that if there is a downturn … that policymakers have space to be able to respond.”
At the IMF-World Bank meetings and the Bund Summit, there’s been “surprise” at how resilient the world economy is, despite debate about how vulnerable it is to a slowdown in AI spend or profitability in the U.S., Adam Posen, president of the Peterson Institute for International Economics, said Tuesday on CNBC’s “Squawk Box Asia.”
He said even if there’s a stock “market correction in the megascalers … in the near term, we can probably have something more like 1987 or 2000, where the profits just rotate to adjacent industries and the real economy isn’t affected much.”