Governor Scicluna addresses Mediterranean Central Banks Governors’ Conference in Cairo

The Governor of the Central Bank of Malta, Professor Edward Scicluna, has participated in a high-level conference of Mediterranean Central Bank Governors held in Cairo, Egypt.

The event was jointly organised by the Central Bank of Egypt, Banco de España, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed), and the Union for the Mediterranean (UfM).

This conference is part of a joint initiative aimed at fostering comprehensive dialogue on the economic and financial outlook of the Mediterranean region, specifically from the perspective of the Governors of Central Banks.

Speaking during the first panel discussion among central bank governors on the impact of artificial intelligence (AI) on central banking, Scicluna said that no doubt AI can meaningfully enhance a central bank’s economic forecasting and policy analysis. In particular they could help in systemic risk mapping, providing early warning systems, and extract insights from social media and corporate reports for central banks’ sentiment analysis.

The Governor emphasised that smaller banks need not panic but they must set up at the earliest a central unit focused on AI and advanced analysis, with a clear mandate and visible leadership for easier coordination with external partners. The unit will need to co-ordinate between the needs of monetary policy, financial stability, statistics and supervision.

Scicluna said that each central bank has to address the AI core capabilities needed. These include framework data infrastructure especially of high frequency data, technical expertise especially data scientist, and machine learning engineers, supported by a strong policy and governance framework. Partnerships with universities, and regional AI networks together with engagement with fintechs and private data providers. 

Scicluna then gave an elaboration of the risks and pitfalls to look out for in this new and wonderful technology.  These include model uniformity, over reliance and excessive trust in AI resulting advice, unchecked legal status, undeclared biases and so-called AI hallucinations.

Finally Scicluna invited Mediterranean Central Bank Governors to benefit from the creation of an AI Mediterranean hub or ‘community of practice’ whereby they would be able to share techniques, data and lessons learnt.