Calculated Risk: AI's Trillion Dollar Leap of Faith and Some CBDCs Aren't "REDI."
AI will help modernize payments, but not how you think.
Artwork of the day: Olivetti "Divisumma 24" calculating machine, Marcello Nizzoli 1956/1956
The Divisumma 24 is a super-automatic writing calculator from 1956 designed by Natale Capellaro and designed by Marcello Nizzoli. It is capable of performing all four operations and has a memory. Thanks to this product, Olivetti "takes home" the prize for technological innovation: the Divisumma 24 is a jewel of precision mechanics and has no rivals on the world market. The machine remained on the market until the early 1970s; in 1967, the millionth unit was produced.
Why today’s stories matter:
Today’s use of an Olivetti calculating machine with this birthday edition newsletter reminds me how far I and likely some of my readers have come!
My father had one of these mechanical marvels on his desk in the ’70s, and as a kid, I enjoyed multiplying 9999 times 999, which would make the machine whir and clunk for at least 15 seconds.
Calculating has gone from whirring gears on a desktop to AI that helps us in ways we can’t yet imagine. I’m not nostalgic, but I think it’s astounding.
This week, we look at the IMF’s new REDI strategy for CBDC, which lays out how not to fail with a CBDC launch! This publication is overdue! This is a must read for any central bank looking for a “calculated” formula for successful CBDC issuance.
Payments and AI are a perfect match, but not in the way you think. AI can’t change or improve payment rails, but it can significantly reduce development time for new ones. Most of our payment rails are as old as the Olivetti mechanical calculator above, and AI can help us go digital.
Next, I'd like to share my latest podcast with my dear friend Paolo Sironi. In this podcast, we take a calculating look at CBDCs and discuss the opportunities and threats they pose to banks.
Finally, a Weekend MUST Read on AI that is 88 pages long and provides a welcome macro view of the topic with something for everyone!
I hope you enjoy this week’s reads!
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WEEKEND READ
AI: Delivering Results Or Moneypit? The Big Leap Of Faith.
Bain earned my prestigious "Weekend Read Award” because, in its massive 88 pages, it provides a rare macro overview of AI with something for everyone.
Bain goes beyond the narrow focus of AI hype to look at the technology from a very high altitude and boldly declares that AI is delivering results.
This new trillion-dollar market will undoubtedly change almost everything, but not all for the better. I give Bain credit for acknowledging that it will lead to further tech decoupling as nations subsidize their industries.
Always the consultant, Bain makes some big predictions for workplace efficiency gains that, while compelling, are still just good guesses.
In reality, industry and governments are taking a giant leap of faith with AI investment, and we don't know how it will play out.
👉TAKEAWAYS
🔹 The market for AI products and services could reach between $780 billion and $990 billion by 2027.
🔹 Sovereign AI blocs are emerging as governments worldwide spend billions of dollars subsidizing domestic computing infrastructure and AI models.
🔹 The AI-driven surge in demand for graphics processing units alone could increase total demand for certain upstream components by 30% or more by 2026.
🔹 Leaders are planning to invest, on average, over three times more in generative AI than laggards.
👉Will these areas actually see the gains Bain predicts?
🔹Customer service and contact centers: 20% - 35% time reduction for manual response
🔹Sales and marketing: 30% - 50% time reduction for content creation
🔹Software product development: 15% time reduction coding related activities
🔹Back office and other productivity: 20% - 50% task automation for document comparison
🚨 AI’s voracious appetite for computing power will spur growth in data centers, from today’s 50–200 megawatts to more than a gigawatt.
Why does AI's 5x increase in electric use get a free pass from the press and environmental movement?
Is it me?
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Birthday edition selfie! “Buon Compleanno” in Italian.
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