Artificial Intelligence, Fintech and Challenges to Central Banks

Technological development particularly boosted by artificial intelligence (AI) has substantial potential to transform many aspects of human lives and the way doing businesses. On the one side, it can offer opportunities, while on the other brings challenges and increases risks. Financial industry is considered the largest user of digital technologies and provider of innovative services. Therefore, it is strongly influenced by digital transformation and under constant threat of cyberattacks. In this paper, the authors are researching the opportunities and risks stemming from the application of AI and its macroeconomic and financial system impacts. The special attention is given to the challenges posed by financial technological development and AI to central banks as they have to adopt to the novel times dominated by electronic financial services and AI tools while at the same time stay persistently dedicated to achieving their key objectives of safeguarding monetary and financial stability as well as contributing to the stability of economic growth. Additionally, the invention of generative artificial intelligence (GenAI) has significantly influenced processes throughout numerous industries, including the financial sector, due to the ability to imitate human behaviour which has enabled computers to behave like humans. Hence, it is important to develop human-centric innovations where AI tools create benefits and serve people instead of replacing them. AI can deteriorate overall inequality so policymakers should act towards developing policies that will ensure AI is used for the good of people and provide benefits for them. The authors further draw attention to the necessity of adopting a robust regulatory framework and building strong and resilient institutions with developed systems for prevention of ever raising cyberattacks.