On November 11, the Fed’s Michael Barr addressed a fintech festival, highlighting the Fed’s focus on AI as it reshapes the economy and financial system. Barr outlined three key points: (i) AI will transform economies; (ii) the financial sector is adopting AI rapidly and must manage the risks; and (iii) central banks, including the Fed, must accelerate their own AI adoption.
Barr referenced a Federal Reserve Bank of New York survey showing firms plan to retrain workers for AI-driven productivity, with layoffs limited, but noted that AI adoption had led some firms to slow hiring, possibly contributing to low U.S. job growth. Barr noted that, in the financial sector, one in ten job postings now referenced AI skills.
Barr emphasized that while AI offers benefits, risks such as reinforcing biases and the potential for AI-driven market manipulation or systematic risk must be managed. He stressed the need for central banks to keep pace by expanding internal AI use.
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