(Bloomberg) -- Federal Reserve Governor Michelle Bowman acknowledged the risks created by artificial intelligence but warned that regulators should also be careful not to constrict the development of useful technologies.
“We need not rush to regulate,” Bowman said in the prepared text of a speech she’s set to deliver in Washington Friday. “An overly conservative regulatory approach can skew the competitive landscape by pushing activities outside of the regulated banking system or preventing the use of AI altogether.”
In the financial sector, she said, AI could be used to improve operational efficiency, combat fraud and expand access to credit.
Bowman also suggested central bankers may benefit.
“Perhaps the broader use of AI could act as a check on data reliability, particularly for uncertain or frequently revised economic data, improving the quality of the data that monetary policymakers rely on for decision-making,” she said.
Bowman also noted that AI could affect monetary policy through its economic impact.
“AI may also play a growing role in monetary policy discussions, as the introduction of AI tools alter labor markets, affecting productivity and potentially the natural rate of unemployment and the natural rate of interest.”
Over the past eight quarters, US labor productivity has advanced at an average annual pace of 2.3%, compared with 1.3% in the decade that preceded the pandemic. A number of Fed policymakers have commented in recent weeks that artificial intelligence might help explain part of that increase, but that it’s too early to know how much it’s contributing.
Earlier this week, Fed Governor Lisa Cook said she expects artificial intelligence will drive a continued pickup in productivity growth, but added there is substantial uncertainty around that forecast.