you define what it means for the humans in the firm to act with “ reasonable steps ” and “ due skill, care and diligence ”? in a more automated, fast - moving world of ai / ml, boards – not just regulators – will need to consider and be on top of these issues. firms will need to consider how to allocate individual responsibilities, including under the senior managers regime. machines lack morals. if i tell you to shoplift, then i am committing an unethical act - and so are you, if you follow my instruction. “ i was only following orders ” is not a legitimate defence. there is, if you like, a double - lock on unethical instructions within a wholly human environment - on the part of the instructor and the instructed. this is one reason why firms and regulators are so determined to promote ‘ good ’ cultures, including, for example, ‘ speak up ’ cultures, and robust whistle - blowing. but there is no such double - lock for ai / ml. you cannot tell a machine to “ do the right thing ” without somehow first telling it what “ right ” is - nor can a machine be a whistle - blower of its own learning algorithm. in a world of machines, the burden of correct corporate and ethical behaviour is shifted further in the direction of the board, but also potentially further towards more junior, technical staff. in the round this could mean less weight being placed on the judgements of front - office middle management. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx there have been some initial steps to promote the ethical use of big data and ai / ml in financial services. notably, for example, in singapore, 7 and – more broadly – within the eu. 8 in the uk, the centre for data ethics and innovation is looking at maximising the benefits of ai, 9 and many consider them leaders in this field. principles - based expectations have focused on areas such as fairness, ethics, accountability and transparency. nevertheless, promoting the right outcomes, even if framed as principle - based expectations, will require appropriate, up - to - date systems and controls across the three lines of defence to ensure an appropriate control environment throughout the firm. further thought is needed. the third challenge posed by greater use of ai / ml to boards is around change. as the rate of introduction of ai / ml in financial services looks

yields in advanced economies, including the uk, over the past month. the main common driver is speculation that the us federal reserve will soon reduce the pace of its asset purchases. that has – not surprisingly – affected yields in other countries because safe, liquid sovereign bonds of the world ’ s largest economies are close substitutes for each other. in the uk, these movements have been reinforced by growing expectations of recovery. as we explained at the time of the forward guidance announcement, a rise in the yields on long term bonds is consistent with our commitment to price stability and supporting the recovery. market interest rates at terms of 2 – 5 years have also risen recently. the date at which the markets expect the first increase in bank rate has moved in from the end of 2015 to mid2015. one possible explanation is that markets think that unemployment will come down to 7 % more quickly than we do. since the aim of our policy is to secure recovery as quickly as possible, that would be welcome. but policy is built not on hope, but on expectation. and we estimate there is only a 1 in 3 chance of unemployment coming down that quickly ( chart 1 ). 4 furthermore, thinking unemployment will come down faster than we expect isn ’ t enough to believe interest rates will rise soon. as i said earlier, the 7 % threshold is a staging post to assess the economy. nobody should assume that it is a trigger for raising rates. another possible explanation is that the increase in shorter - term yields, like the move in long yields, reflects changing expectations of us monetary policy. but the us recovery is much further advanced than that in the uk. while much has been made of the special relationship between the us and uk, it is not so special that the possibility of a reduction in the pace of additional stimulus in the us warrants a current reduction in the degree of monetary stimulus in the uk. we are not alone in that belief – other major independent forecasters such as the obr and niesr share our view that unemployment will be above 7 % in 3 years ’ time. the mpc ’ s assessment of the outlook for unemployment and likelihood of hitting the threshold is described in the august inflation report, available on the bank ’ s website at http : / / www. bankofengland. co. uk / publications / pages / inflationreport / 2013 / ir1303. aspx. bis central bankers ’ speeches movements in longer - term market interest rates are certainly relevant, but