Artificial intelligence promises increased production and lower costs, but for central bankers, the challenge begins with how these benefits will be distributed across the real economy. Recent interventions by Fabio Panetta (Bank of Italy) and Andrew Bailey (Bank of England/FSB) highlight the risks hidden behind the technological euphoria.
The Inflation and Labor Puzzle
According to Fabio Panetta, AI's impact on inflation depends directly on who reaps the profits. The Bank of Italy estimates that AI could add more than one percentage point to annual labor productivity growth, but the outcome remains uncertain:
- Growth Scenario: If workers see their incomes rise, increased consumption could trigger inflationary pressures.
- Uncertainty Scenario: If the fear of automation prevails, consumers may cut spending and increase savings, leading to disinflationary effects sooner.
Market Valuations and Leverage
Andrew Bailey warns of the excessive optimism already embedded in tech stock prices. The combination of high valuations, market concentration, and increased leverage (debt-funded investments) makes the system vulnerable to a sharp correction if AI profits fail to meet expectations.
The Immediate Threat of Cyberattacks
Perhaps the most immediate risk concerns the use of AI for attacks on critical infrastructure. The European Systemic Risk Board (ESRB) points out that AI's offensive capabilities may outpace defensive ones in the short term. Consequently, the ECB has set a deadline of October 31, 2026, for systemic banks to draw up action plans against these new threats.
