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The rise of artificial intelligence: benefits and risks for financial stability

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화요일, 5월 28, 2024

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The emergence of generative artificial intelligence (AI) tools represents a significant technological leap forward, with the potential to have a substantial impact on the financial system.

Key Points:

The emergence of generative artificial intelligence (AI) tools represents a significant technological leap forward, with the potential to have a substantial impact on the financial system.
Conceptually, AI brings both benefits and risks to the financial system.

The globalization of climate change: amplification of climate-related physical risks through input-output linkages

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화요일, 5월 28, 2024

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To address this shortcoming, this paper for the first

Key Points:

To address this shortcoming, this paper for the first
time combines country-level GDP losses due to climate-related physical risks with a global Input-Output
model.
More specifically, climate-related GDP-at-risk data are used to quantify the potential direct
impact of physical risks on GDP at the country or regional level.
JEL Classification: E01, Q54, Q56, F18
Keywords: Supply chains, physical risk, climate change
ECB Working Paper Series No 2942

1

Non-technical summary
The estimation of real-economic damages due to climate change physical risks remains an important
challenge in the face of global warming.
Many economic models make significant simplifications on
the channels of transmission of climate physical risks across the globe, often giving the impression that
the risks for the Euro Area will be relatively small.
In particular, the role of global supply chains in the
transmission and potential amplification of climate related physical risks has received little attention.
This is relevant because climatologists predict that direct impacts from climate change-induced natural
disasters will materialize mainly outside the Euro Area.
Understanding potential real economy losses would also contribute to better portray the risks which
could spill over into the financial system.
Introduction
Recent estimates of real-economic damages due to climate change physical risks do not appear
incredibly worrying, not at least those for European countries.
The ECB climate stress test of 2022 also finds relatively little impact from physical risks.
Nordhaus? seminal 1991 paper was one of
the first to estimate the effect of climate change on economic output (Nordhaus, 1991).
Second, our paper relates to the literature that has started to analyse the transmission of climate risks
across borders.
In this strand, however, the focus remains mostly on transition risks (Devulder & Lisack,
2020, Frankovic, 2022, Krivorotov, 2022).
Third, we connect to the literature on the study of the propagation of climate physical risks across
borders, which remains underdeveloped.
To
our knowledge this paper is the first to apply IO modelling with physical risks on a global scale.
However, the authors use a general equilibrium modelling approach and estimate
how sectoral changes in productivity due to physical climate risks affect a global, multisectoral,
intertemporal general equilibrium model.
This paper aims at making economic impact assessments of climate change more realistic by
incorporating a key element of globalization.
More specifically, this paper is the first to analyse the
transmission of GDP losses from climate change related physical risks through global country-sector
input-output linkages.
), this paper makes a first important step towards getting a more realistic
picture of the risks arising from climate change.
The natural hazards
influenced by climate change are many and include floods and inundations, droughts, heatwaves,
windstorms, and wildfires.
Importantly, physical risks do not only have a direct impact on the economy, as cascading or amplifying
effects are also possible through input-output linkages.
In general, the global economy is exposed to physical risks which generate GDP losses.
Specifically, SPGlobal GDP-at-risk data are used to quantify the potential
direct impact of physical risks on GDP at the country level.
This is done to account
for the fact that the realization of physical risks from climate change reduces both domestic final demand
and production capacity (Feng and Li, 2021).
Figure 2: GDP at risk from climate change-related physical risks, RCP 8.5 scenario
Source: SP Global and ECB
3.3 Modelling climate shocks
The IO tables system is initially in equilibrium.
ECB Working Paper Series No 2942
21

Figure 4: GDP-at-risk resulting from IO amplification of physical risks under the RCP 8.5 scenario.
ECB Working Paper Series No 2942
22

Figure 5: GDP-at-risk resulting from IO amplification of physical risks under the RCP 8.5 scenario.
However, not analysing the amplification of climate risks through supply chains for
lack of data could lead to a large underestimation of the risks posed by climate change for economic and
financial stability.
Adams, K. M., Benzie, M. & Croft, S. Climate change, trade, and global food security: a global
assessment of transboundary climate risks in agricultural commodity flows.
In this sense, the
exposure to physical risks of direct trading partners is a limited indicator for the amplification of losses
through global value chains.

Xiao-I's Virtual Try-on Technology (OOTDiffusion) Achieves Significant Breakthroughs, Attracting Industry-wide Attention and Sparking Discussions

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화요일, 4월 23, 2024

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SHANGHAI, April 23, 2024 /PRNewswire/ -- Xiao-I Corporation (NASDAQ: AIXI) ("Xiao-I" or the "Company"), a leading company in the field of artificial intelligence, is pleased to announce its recent significant progress in its latest product line, virtual Try-on technology (OOTDiffusion). The OOTDiffusion algorithm, independently developed by Xiao-I, was released on arXiv, an open-access repository of electronic preprints and postprints, in March 2024 (Access Paper: https://arxiv.org/abs/2403.01779).

Key Points:

OOTDiffusion is a new network architecture for realistic and controllable virtual try-on (VTON).
Xiao-I utilizes a pre-trained latent diffusion model and designs an equipped UNet to learn the detailed features of clothing.
Xiao-I is dedicated to making changes in everyone's life with AI, driven by the increasing demand for virtual try-on technology in the market.
Please stay tuned for the release of the OOTDiffusion products in May by Xiao-I and enjoy the new experience brought by virtual try-on.

Qunnect Achieves Record-Breaking Performance for Distributing Polarization Qubits on GothamQ Network in NYC

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월요일, 4월 15, 2024

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BROOKLYN, N.Y., April 15, 2024 /PRNewswire/ -- Qunnect, a leader in quantum-secure networking technology, today announced that GothamQ, its quantum network utilizing existing commercial fiber optic cable, surpassed previous performance metrics in enabling the distribution of polarization-based quantum entanglement while delivering exceptionally high rates of preservation and fidelity. This technical achievement signifies the viability of Qunnect's quantum networking components to perform entanglement-based protocols over prolonged durations in real-world environments.

Key Points:

Unlike most quantum networks, Qunnect uses atoms at room temperature to generate polarization entangled photons, since these qubits are native to other quantum devices such as sensors and computers.
By constructing a stable network to distribute polarization qubits, Qunnect has demonstrated a path forward for other quantum networks to host applications beyond secure communications.
For this demonstration, the Qunnect team used its hardware instruments to generate, distribute, and preserve entangled photons over 34 kilometers of fiber within the GothamQ network.
By constructing a stable network to distribute polarization qubits, Qunnect has demonstrated a path forward for other quantum networks to host applications beyond secure communications.

Nature Communications Publishes Zapata AI Research on Generative AI for Optimization

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화요일, 4월 2, 2024

Zapata Computing Holdings Inc. (“Zapata AI”) (Nasdaq: ZPTA), the Industrial Generative AI company, today announced that its foundational research on generator-enhanced optimization (GEO) has been published in the esteemed Nature Communications journal.

Key Points:

Zapata Computing Holdings Inc. (“Zapata AI”) (Nasdaq: ZPTA), the Industrial Generative AI company, today announced that its foundational research on generator-enhanced optimization (GEO) has been published in the esteemed Nature Communications journal.
The research, titled “Enhancing Combinatorial Optimization with Classical and Quantum Generative Models,” introduces Generator-Enhanced Optimization (GEO), a novel optimization method that leverages the power of generative modeling to suggest high-quality candidate solutions to complex optimization problems.
It is the second Zapata AI paper on generative AI to be published in Nature Communications since December 2023 .
The GEO paper reflects the results of a pioneering effort to apply generative AI to portfolio optimization and other optimization problems.

H2O.ai Releases New Language Model H2O-Danube-1.8B for Mobile

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목요일, 2월 29, 2024

Despite being trained on significantly less data than comparable models, benchmark results show H2O-Danube-1.8B achieves highly competitive performance across a wide range of natural language tasks.

Key Points:

Despite being trained on significantly less data than comparable models, benchmark results show H2O-Danube-1.8B achieves highly competitive performance across a wide range of natural language tasks.
"We are excited to release H2O-Danube-1.8B as a portable LLM on small devices like your smartphone, something that Anthropic is not offering today.
Building on the base H2O-Danube-1.8B model, the chat version was tuned using supervised learning on dialog datasets followed by reinforcement learning using human preferences.
H2O.ai will be releasing additional tools to simplify using the models in applications, as well as exploring potential future model scaling.

For the First Time, Quantum-Enhanced Generative AI Generates Viable Cancer Drug Candidates

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화요일, 2월 20, 2024

The research points to a promising future of hybrid quantum generative AI for drug discovery using today’s quantum devices.

Key Points:

The research points to a promising future of hybrid quantum generative AI for drug discovery using today’s quantum devices.
In the study, the researchers utilized generative AI to develop novel KRAS inhibitors, a critical focus in cancer therapy historically deemed “undruggable” due to its intrinsic biochemical properties.
Generative models running on classical hardware, quantum hardware (specifically, a 16-qubit IBM device), and simulated quantum hardware generated one million drug candidates each, which were then filtered algorithmically and by humans.
“For the first time ever, we’ve been able to produce real effective drug lead molecules with quantum-enhanced generative AI,” said Christopher Savoie, CEO and co-founder of Zapata AI.

Kakao Brain Unveils Labeler Project Exclusively for Medical Image preliminary report

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화요일, 2월 27, 2024

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SEOUL, South Korea, Feb. 27, 2024 /PRNewswire/ -- On the 16th, Kakao Brain released a medical image labeler project on GitHub, capable of diagnosing specific diseases from chest X-ray image draft readings.

Key Points:

SEOUL, South Korea, Feb. 27, 2024 /PRNewswire/ -- On the 16th, Kakao Brain released a medical image labeler project on GitHub, capable of diagnosing specific diseases from chest X-ray image draft readings.
Aiming to contribute to the improvement of medical diagnoses, Kakao Brain initiated research on a labeler project that extracts specific disease names more accurately and efficiently than models previously released by other companies.
Kakao Brain unveiled the Labeler project on GitHub and published a paper titled 'CheX-GPT: Harnessing Large Language Models for Enhanced Chest X-ray Report Labeling' on arXiv, an open-access archive.
Kim Il-du, CEO of Kakao Brain, stated, "We plan to release a test set we created so that many researchers can use Kakao Brain's Labeler project as a benchmark for testing."

The macroeconomic effects of global supply chain reorientation

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토요일, 2월 10, 2024

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We analyse the macroeconomic

Key Points:

We analyse the macroeconomic
effects of supply chain reorientation through localisation policies, using a global dynamic
general equilibrium model.
While arguments about comparative advantage, the potential forgone benefits of international specialisation and industry- and product-specific disruptions are familiar, there is less
analysis on the macroeconomic effects of supply chain changes resulting from localisation policies.
The large sensitivity of the global economy to the recent supply chain shocks suggests that
the international trade reconfiguration implied by localisation policies could also have sizable
impacts on key macroeconomic variables such as output, employment and inflation.
Thus, localisation focuses on the
goods in our model most closely related to global supply chains.
Retaliation also attenuates any positive effects from
reshoring on output and implies a reduction in the volume of overall international trade.
This finding calls for limiting the scope of reshoring, such as by focusing on vital goods that are
most susceptible to supply chain disruptions.
Either that, or the economic costs are considered a worthwhile trade-off for an increase
in security of supply, for example.
While arguments about comparative advantage, the potential forgone benefits of international specialisation and industry- and product-specific disruptions are familiar, there is less
analysis on the macroeconomic effects of supply chain changes resulting from localisation policies.
Recent supply chain shocks have had large effects, with disruptions in 2021 estimated
to have reduced euro area GDP by around two percent and doubled the rate of manufacturing producer inflation (Celasun et al., 2022).
To analyse this issue, we simulate a (partial) reshoring of production back to Europe in
a global dynamic general equilibrium framework.
Thus,
localisation focuses on the goods in our model most closely related to global supply chains.3 We
model reshoring through a direct change to the export goods? production-function parameters.
Since reshoring
effectively shortens the supply chain, the sum of markups along the chain falls.
This means that imports that are at the end of the supply chain (i.e.
In particular, our work relates to papers examining the potential for countries to reduce
their exposure to global supply chains.
(2021) demonstrate that reduced reliance on foreign inputs does not mitigate pandemicinduced contractions in labour supply.
(2021) find no evidence of a relationship
between global value chain integration and macroeconomic volatility.
This dynamic, along with factors such as natural disasters, climate-change
induced volatility and terrorism mean that supply chain disruptions could be a new normal
(Grossman et al., 2021).
Our work contributes to the literature providing dynamic general equilibrium analyses of
protectionist policies, in particular those using global macroeconomic models to quantify trade
policy changes.
(2008) analyse the effect of a rise in protectionism in response
to rising global trade imbalances.
Linde? and Pescatori (2019) find that although the macroeconomic costs of a
trade war are substantial, a fully symmetric retaliation is the best response.
(2020) consider a rich input-output structure and demonstrate that closer integration amplifies
the adverse effects of protectionist trade policies.
Several recent studies have also examined the economic effects of a global trade fragmentation.
First, we modify a dynamic general
equilibrium model of the global economy in order to analyse the transmission of localisation
policies.
This allows for a comprehensive treatment of cross-border macroeconomic interdependences and spillovers between the different regions.
4
There is, however, substantial cross-country heterogeneity in terms of impact, with small open economies
(SOEs) reliant on global supply chains more affected.
ECB Working Paper Series No 2903
7

Second, we are able to assess both long-run effects and the transition dynamics of localisation
policies.
Our model contains a detailed monetary block and captures inflation dynamics, which is a key
concern for supply chain reorientation.
Overall, our paper contains a careful analysis of the key aspects of the localisation debate,
including effects of localisation on domestic competition and efficiency.
Section 2 provides a brief overview of the model, the modifications to examine
global supply chain reorientation, some key details on the calibration and a brief discussion of
the nature of our exercise.
(2020) for discussions of the relative strengths and weaknesses of
trade and macroeconomic models in assessing large economic shocks.
2.1
Supply chain reorientation

Our analysis focuses on imported inputs used to produce goods for export, as the introduction
of localisation policies is in response to recent disruptions to global supply chains.
Since reshoring
effectively shortens the supply chain, the sum of markups along the chain falls.
Further to
these effects, engagement with global firms provides an opportunity for knowledge spillovers to
local firms (Criscuolo et al., 2017).
This finding calls for limiting the scope of reshoring, such as by focusing on vital goods that are
most susceptible to supply chain disruptions.
(B12)
Adjusting the share of local inputs in export goods, of course, affects prices and quantities all
along the supply chain.

Fujitsu and Delft University of Technology establish new quantum lab

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목요일, 1월 25, 2024

TOKYO, Jan 25, 2024 - (JCN Newswire) - Fujitsu and Delft University of Technology today announced the establishment of the Fujitsu Advanced Computing Lab Delft at Delft University of Technology, an industry-academia collaboration hub dedicated to the development of quantum computing technologies.

Key Points:

TOKYO, Jan 25, 2024 - (JCN Newswire) - Fujitsu and Delft University of Technology today announced the establishment of the Fujitsu Advanced Computing Lab Delft at Delft University of Technology, an industry-academia collaboration hub dedicated to the development of quantum computing technologies.
The Advanced Computing Lab will be established at world-leading quantum technology research institute QuTech (2) - a collaboration between Delft University of Technology and the Netherlands Organization for Applied Scientific Research (TNO) - and aims to accelerate R&D of diamond-spin quantum computing, a technology that Fujitsu and Delft University of Technology have been jointly researching since October 2020.
"Strengthening our collaboration with Delft University of Technology offers a chance to unlock new possibilities in quantum.
Main members include:
- Dr. Shintaro Sato (Fellow SVP & Head of Quantum Laboratory at Fujitsu Research, Fujitsu Limited)
- Kenichi Kawaguchi (Research Director, Quantum Hardware Core Project, Quantum Laboratory at Fujitsu Research, Fujitsu Limited)
- Shinji Kikuchi (Senior Project Director, Quantum Application Core Project, Quantum Laboratory at Fujitsu Research, Fujitsu Limited)
- Matthias Moller (Associate Professor, Faculty of EEMCS, Delft University of Technology)
- Tim Taminiau ( Group Leader, QuTech, Delft University of Technology)
- Ryoichi Ishihara (Associate Professor, QuTech, Faculty of EEMCS, Delft University of Technology)
[1] Fujitsu Small Research Lab :An initiative to achieve greater breakthroughs beyond the results of ordinary joint research.