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AI and the Fed
This paper examines how central banks can strategically integrate artificial intelligence (AI) to enhance their operations. Using a dual-framework approach, we demonstrate how AI can transform both strategic decision-making and daily operations within central banks, taking the Federal Reserve System (FRS) as a representative example. We first consider a top-down view, showing how AI can modernize key central banking functions. We then adopt a bottom-up approach focusing on the impact of generative AI on specific tasks and occupations within the Federal Reserve and find a significant potential for workforce augmentation and efficiency gains. We also address critical challenges associated with AI adoption, such as the need to upgrade data infrastructure and manage workforce transitions.
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