cash is the king ” phenomenon ). financial risk in the us, europe, and china is on the rise in term of interest rates, exchange rates, financial asset valuations, and credit spreads. the rise is due to continuing global geopolitical tensions, increasing risk of economic recession, high inflation, aggressive interest rate graph 3. a. strong us dollar phenomenon graph 3. b. us treasury yield development is also predicted to continue in latin america, such as in brazil which will be remain high at 13. 75 % until the first quarter of 2023, and mexico which is currently at 9. 25 % will become at 10. 75 % in the first quarter 2023. policy rate at both central banks will remain high throughout 2023, before declining to 8. 00 % and 7. 50 % respectively at the end of 2024 ( table 3 ). meanwhile, the increase in monetary policy rates in the ems asia region was relatively lower. monetary policy rates in india and south korea, for example, will increase to 6. 40 % and 3. 50 % respectively in the first quarter of 2023 and be maintained throughout 2023. the phenomenon of higher and longer monetary policy rates in developed countries compared to eme countries shows that fragmentation due to geopolitical tensions index index usd appreciation against major currencies embi spread data as of 14 november 2022 source : bloomberg dollar index ( rhs ) 8 11 5. 5 5. 0 4. 5 4. 0 3. 5 3. 0 2. 5 2. 0 1. 5 1. 0 0. 5 0. 0 bps % 1m 2m 3m 6m 1y 2y 3y 5y 7y 10y 20y 30y increase in yield ( rhs ) yield as of 15 nov - 2022 source : bloomberg yield as of 31 des - 2021 hikes, and the strong us dollar ( graph 4. a ). in such conditions, the risk premium is more decisive in portfolio investment decisions than the difference in interest rates between countries. moreover, the lack of clarity over the solution to global geopolitical tensions has further encouraged global investors to be extra risk averse in holding securities and shifting them to liquid assets. this has resulted in continued capital outflows of bond investment portfolios from emes since early 2022 as global geopolitical tensions intensify ( graph 4. b ). this development has put further pressure on the exchange rates and the ability to issue

artificial intelligence and machine learning will do most of the heavy lifting in predicting economic indicators upon which to base central bank policies. we will undoubtedly rely on technology to obtain real - time forecasts. we will also undoubtedly use big data analysis to detect bubbles in the financial markets and to identify and analyze complex macro - financial linkages. central banks are already seeking to obtain more micro - level data by becoming data warehouses and to develop - data based supervisory tools which will improve risk mitigation. will this technology replace us – central bankers – in making policy decisions? my answer is : certainly not! let me elaborate. first, a great deal of uncertainty exists as to how basic economic relations evolve over time. economics, though increasingly fixated on mathematics, econometric tools, and applications is a social science focusing on how humans make decisions. it does not, and never has been, a homogenous body with a firm canon of knowledge. fundamental structural features of the economy, known by more familiar names such as the " natural rate of unemployment ", " potential output growth ", " neutral real interest rate " – what fed chairman mr. jerome powell called the " stars " 1 – change location significantly over time, making " navigating by the stars " rather challenging. furthermore, even seemingly simple issues, such as establishing causal links rather than merely finding correlations among various economic variables, require lengthy discussion and often lead to clashes of opinions. second, the effectiveness of central bank policies is based on adequate communication. and communication boils down to presenting stories that shape the expectations of market participants regarding future monetary policy. to date, the ability to present such nuances associated with the conduct of monetary policy has been exclusively human. finally, it may also happen that policy objectives are not achieved, due to unforeseeable crises – so - called black swans. central banks during " black swan " episodes must behave differently than in normal times – and rightly so. deciding the best way forward when circumstances are rapidly changing and the future is clouded by enormous uncertainty is a task which no computer is able to cope with, today or quite possibly ever. it is thus my firm conviction that, in a hundred years'time, there will still be some central bankers around to gather and celebrate two hundred years of lietuvos bankas. dear colleagues, 2 / 3 bis - central bankers'speeches central banks must embrace the revolution underway in digital money to ensure that they remain at the heart of the global