James Benford, Executive Director for Data and Analytics Transformation and Chief Data Officer, has given a speech about how the Bank of England is applying AI.

His speech explained how the Bank is preparing for the transformative potential that AI can bring as it improves how the Bank works internally to deliver monetary and financial stability. He set out three key points: 

• Central banks are not starting from scratch. They build on many decades of experience working with economic and financial models and, more recently, multidisciplinary AI solutions.
• The Bank will expand the breadth and depth of its use of models.  It also needs to accelerate and broaden plans to modernise how it manages and works with data.
• The Bank needs to watch for gaps in existing frameworks as it increases using AI. Ongoing work is needed to embed ethical consideration, appropriate governance, and stress testing into the systems being built or used internally at the Bank.

The vast amount of data greatly expands the potential use cases for AI. However, it also introduces wide sets of questions around acceptable use, or ethics, with issues around data privacy and security, and fairness and transparency. And the dynamism and complexity of AI systems means that how they will evolve and respond in the future is uncertain, so need to be stress tested.  The Bank is working on its technological foundations. It is also broadening the scope of its data management and governance work, and broadening its skills foundation.  The Bank is trying out different new tools for its work, as well as putting in place AI governance.

The Bank also says there are several dimensions that need to be satisfied for AI to be TRUSTED – ie targeted, reliable, understood, secure, stress-tested, ethical and durable.

The Bank’s policy committees are also working on how to address the potential risks to safety and soundness and to financial stability from financial firms’ use of AI and so to enable its safe adoption. 

The Bank of England is also setting up an AI Consortium. Its purpose is to provide a platform for public-private engagement to gather input from stakeholders on the capabilities, development, deployment and use of AI in UK financial services. Its specific aims are:

• to identify how AI is or could be used in financial services, for example, by considering new capabilities, deployments and use cases as well as technical developments where relevant;
• to discuss the benefits, risks and challenges arising from the use of AI. Such benefits, risks and challenges may be with respect to financial services firms or with respect to the wider financial system; and
• to inform the Bank of England’s approach to addressing risks and challenges, and promoting the safe adoption of AI.