Building AI Capacity in Central Banks: A Focus on the Western Balkans

This policy brief explores the readiness and capacity of central banks in the Western Balkans to integrate Artificial Intelligence (AI) into their operations. While AI is already being utilized in central banks of advanced economies to enhance economic forecasting, regulatory supervision, and risk assessment, central banks in the Western Balkans remain largely constrained by outdated infrastructure, fragmented data systems, and limited human capital. Based on a qualitative study involving expert surveys from six central banks in the region, the brief identifies critical barriers to AI adoption, including strategic misalignment, cultural inertia, and regulatory ambiguity. To bridge these gaps, six actionable recommendations are proposed: embedding AI in core strategies, establishing dedicated AI units, upgrading data infrastructure, investing in in-house capabilities, fostering regional cooperation, and updating regulatory frameworks. Timely action is critical to ensure that central banks in the region can effectively and appropriately fulfill their mandated functions.