Central banks need to understand who benefits from artificial intelligence-driven gains, ​as their distribution will help shape ‌aggregate demand and inflation, European Central Bank Governing Council member Fabio Panetta said this week.

AI ​is set to transform productivity and ​growth, labour and financial markets, and ⁠payment systems, Panetta said.

If AI mainly ​creates new tasks and raises expected labour ​income, demand could increase before AI’s full productivity benefits materialise, prolonging inflationary pressures, he added.

Panetta, who ​is also governor of the Bank ​of Italy, was speaking at an event hosted by ‌the ⁠National Bank of Ukraine.

Credibility is an essential asset of every central bank, but how it is built and preserved depends ​on the ​nature ⁠of the challenges faced, he said.

Central banks cannot remain on the ​sidelines, Panetta said, adding that ​understanding ⁠changes underway is increasingly essential to central bank credibility.

According to Panetta, if automation dominates, ⁠weaker ​consumption could cause the ​disinflationary effects of AI to emerge sooner.