Explanation:
External or "off-the-shelf" AI models are often proprietary and act as "black boxes," leading to reduced transparency which can be problematic for institutions requiring high levels of explainability like central banks. Furthermore, relying on third-party providers exposes institutions to the risk of vendor lock-in.
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Q.41 A key trade-off for central banks considering AI adoption involves choosing between "off-the-shelf" (external) and in-house (internal) models. What is a primary disadvantage of using external AI models?
A
Higher development costs and longer implementation times.
B
Reduced transparency and potential vendor lock-in.
C
Limited access to large datasets for model training.
D
Difficulty in attracting and retaining specialized AI talent.