The Bank for International Settlements (BIS) has issued a comprehensive report, Artificial intelligence and human capital: Challenges for central banks, offering a crucial examination of how the burgeoning field of artificial intelligence (AI) will reshape the operational landscape and, critically, the human capital requirements of central banks.

The report paints a nuanced picture, acknowledging the transformative potential of AI while highlighting the significant strategic and human resource challenges that these institutions must address to fully leverage its benefits.

AI integration within central banking

AI co-pilots

At its core, the BIS report posits two potential pathways for AI integration within central banking. The first, the “AI co-pilots” scenario, envisions AI as a powerful augmentative tool. In this model, AI technologies are deployed to enhance the productivity of existing staff without fundamentally altering established workflows.

The report notes that this is already a reality in many central banks, where AI is being used to “enhance staff productivity without fundamentally altering how their work is conducted.” Examples include AI-powered tools for data analysis, report generation, and even initial fraud detection, freeing up human experts to focus on more complex tasks requiring nuanced judgment.

AI agents

The second, more radical approach, involves the rise of “AI agents.” These are more autonomous AI systems capable of executing specific central bank tasks with increasing independence. The report suggests that “AI agents could transform workflows in the next decade, though human oversight will remain essential to ensure their responsible and ethical adoption.”

This scenario has the potential to significantly alter organizational structures and the demand for specific roles. For instance, AI could potentially automate routine data collection and processing, certain aspects of market monitoring, or even initial assessments of regulatory compliance.

Regardless of which scenario, or more likely a combination of both, materializes, the BIS report underscores the critical importance of a proactive and strategic approach to human capital. The authors emphasize that “to successfully transition toward AI-intensive workflows under either scenario, a focus on retraining and upskilling existing staff, attracting new talent and fostering a culture that embraces innovation is warranted.”

Workforce challenges

The report outlines several key challenges that central banks will face in this transformation. A primary concern is the intense competition for specialized talent. The BIS report explicitly states that “central banks face significant challenges in attracting and retaining talent,” particularly in areas such as “cybersecurity, IT, fintech, data science, and AI/ML.”

Furthermore, the high demand for these roles across the economy “means that public institutions may struggle to match private sector salaries for top AI talent.” This talent gap poses a significant risk, as a lack of in-house expertise could hinder the effective development, implementation, and oversight of AI systems. Central banks will need to explore innovative recruitment strategies, offer competitive benefits packages, and potentially foster collaborations with academic institutions and the private sector to bridge this gap.

Beyond attracting new talent, the report stresses the imperative of investing in the existing workforce. The integration of AI will necessitate a significant shift in required skillsets. As the report highlights, “new work profiles will be needed to build and maintain AI applications, and existing ones will require additional skills to harness AI.” This will require substantial investment in reskilling and upskilling initiatives. Central bank employees will need to develop competencies in areas such as data literacy, AI ethics, human-machine collaboration, and the oversight of complex algorithmic systems.

Cultural and organizational shifts

Furthermore, the BIS report touches upon the cultural and organizational shifts required to embrace AI. Fostering a “culture that embraces innovation” is crucial. This includes encouraging experimentation, promoting interdisciplinary collaboration between technical experts and domain specialists, and establishing clear ethical guidelines for AI development and deployment.

Central banks will need to create an environment where employees feel empowered to engage with AI tools and contribute to their responsible integration.

The report also briefly touches upon the potential implications for the core functions of central banks. AI could revolutionize areas such as economic forecasting, risk management, financial stability monitoring, and even the design and issuance of digital currencies.

However, the report cautions that these advancements must be approached with careful consideration of potential risks, including algorithmic bias, data security vulnerabilities, and the need for robust governance frameworks. The human element, with its capacity for critical thinking, ethical judgment, and nuanced understanding of complex economic and social contexts, will remain indispensable in overseeing and guiding these AI-driven processes.

Human capital strategies

The BIS report provides a vital framework for understanding the transformative impact of AI on these critical institutions. While acknowledging the immense potential for enhanced efficiency and innovation, the report firmly underscores the paramount importance of strategically managing human capital. By proactively addressing the challenges of talent acquisition, workforce reskilling, and fostering a culture of innovation, central banks can navigate the AI revolution effectively, ensuring they remain resilient, effective, and accountable in an increasingly technologically driven world.

The report serves as a clear call to action for central bank leaders to prioritize their human capital strategies as they embark on this compelling yet complex journey into the age of AI.

Report authors: Sarah Bell, Blaise Gadanecz, Leonardo Gambacorta, Fernando Perez-Cruz and Vatsala Shreeti, BIS.