ECB Governing Council member Panetta urges tracking AI income distribution — Cyprus Mail

In Cyprus, Fabio Panetta, a member of the Governing Council of the European Central Bank and governor of the Bank of Italy, said at an event organised by the National Bank of Ukraine that central banks should track who benefits from the development of artificial intelligence. According to him, the distribution of such income will affect aggregate demand and inflation, Cyprus Mail reports.

Impact on the economy

Panetta noted that artificial intelligence can transform productivity and economic growth, the labour market, financial markets and payment systems. He stressed that central banks cannot remain on the sidelines of these processes, while understanding the changes is becoming increasingly important for confidence in them.

According to the official, confidence is an important asset for every central bank, but the ways of building and maintaining it depend on the nature of the challenges they face.

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Two possible scenarios

If AI mainly creates new tasks and raises expected labour income, demand may increase before productivity gains are fully realised. According to Panetta, this could prolong inflationary pressures.

Conversely, if automation prevails, consumption may weaken. Under such conditions, the disinflationary effect of artificial intelligence may emerge earlier, the ECB representative believes.