Leading economists discuss AI's impact on monetary policy and financial stability
The Banco de España hosted its 8th Annual Research Conference on the Economics of Artificial Intelligence in Madrid on November 13 and 14, 2025. The event brought together leading academics and central bankers to discuss AI's implications for monetary policy, labor markets, and financial stability.
AI's influence on central bank models and labor dynamics
The conference opened with a welcome address by Deputy Governor Soledad Núñez.
The first day's sessions delved into AI's implications for monetary policy, with discussions on estimating nonlinear heterogeneous agent models using neural networks, featuring research from the ECB, EUI, and BIS.
Another paper explored monetary policy with persistent supply shocks, presented by authors from Banco de España, University of Lancaster, and HEC Lausanne.
The afternoon sessions focused on productivity and the labor market, examining the rapid adoption of generative AI, with contributions from the Federal Reserve Bank of St. Louis.
Further discussions explored AI's broader impact on the labor market, including research from Yale SOM, Kellogg School of Management, and MIT Sloan School of Management.
These sessions highlighted the transformative potential of AI for economic modeling and its complex effects on employment structures.
Navigating AI's financial stability challenges
The second day of the conference focused on financial stability, chaired by José Maria Serena from Banco de España.
Discussions included institutional asset pricing, segmentation, and inequality, with research from the University of Toronto and Princeton University.
A significant session explored artificial intelligence and relationship lending, featuring work from the BIS and Banca d'Italia, examining how AI reshapes credit provision and risk assessment.
The conference also featured a keynote by Jesus Fernández Villaverde (University of Pennsylvania) on "Deep Learning in Economics: A Geometric Interpretation," offering foundational insights into AI's methodological advancements.
The event highlighted the interdisciplinary nature of AI's economic challenges and the need for collaborative research.
AI research: Bridging theory and practice
The conference successfully highlighted the growing interdisciplinary focus on AI's economic implications, bringing together diverse perspectives.
While offering valuable theoretical insights, the practical policy relevance of some presented models remains to be fully demonstrated.
Future research should prioritize empirical validation and direct applicability for central bank decision-making.