In an exclusive interview with TIME, San Francisco Federal Reserve president and chief executive Mary Daly said that the explosion of artificial intelligence (AI) could improve the labor market in the long-term and make workers more productive, even as workers fear the rising technology will change or eliminate their jobs. "Jobs are being created, as well as jobs being replaced," Daly said of AI. "If we can get people to upskill or reskill to take the jobs that are being created, we'll have a very successful and growing economy. But that's the burden on us--to make sure that everyone can participate in this changing technological development." TIME sat down with Daly at the Aspen Ideas Festival on June 28 to discuss the nation's monetary policy, a potential softening in the labor market, the role of AI in the workforce, and more. This interview has been condensed and edited for clarity. TIME: Tell me a bit about your role as a Federal Reserve Bank president.

The beauty pageant industry isn't what it used to be. Miss Universe, which has been around since 1952, has suffered a dramatic ratings decline in the last five years. In May, the reigning Miss USA and Miss Teen USA gave back their crowns, sparking fresh controversy in the community. Yet, a new kind of beauty pageant has emerged. This pageant is similar in many ways to the traditional experience, except for one important detail: the women are not real. The World AI Creators Awards (WAICAS) has gathered 10 finalists in their quest to find "Miss AI," the winner of a beauty pageant for women generated by artificial intelligence (AI).

As AI companies work furiously to improve the intelligence and usefulness of their products, their demand for cheap, plentiful energy has skyrocketed. This gold rush has been extremely profitable for an unlikely beneficiary: Bitcoin miners. In recent months, major Bitcoin mining companies have started to swap out some of their mining equipment in favor of rigs used to run and train AI systems. These companies believe that AI training could provide a safer and more consistent source of revenue than the volatile crypto industry. And so far, these pivots have been warmly received by investors, leading to the market cap of 14 major bitcoin mining companies jumping in value by 22%, or 4 billion, since the beginning of June, J.P. Morgan reported on June 24. This transition reflects several trends of the moment: the roaring hype cycle of AI; the dwindling access to power, and a tenuous bitcoin mining landscape following the bitcoin halving.

Hanging on the wall of Anthropic's offices in San Francisco in early May, a stone's throw from the conference room where CEO Dario Amodei would shortly sit for an interview with TIME, was a framed meme. Its single panel showed a giant robot ransacking a burning city. Underneath, the image's tongue-in-cheek title: Deep learning is hitting a wall. That's a refrain you often hear from AI skeptics, who claim that rapid progress in artificial intelligence will soon taper off. Another points to the devastated city: "wall."

The Swedish buy-now-pay-later company Klarna has become something of a poster child for the potential benefits of generative artificial intelligence. The company relies on AI to create and tailor promotional images and to draft marketing copy, saving millions of dollars. Earlier this year it said an AI chatbot assistant was doing the work of 700 human customer-service agents, which it forecast would boost profits by 40 million this year. Klarna's approach highlights generative AI's promise for powering businesswide systems, like customer service. U.S. businesses are investing in AI, and they're eager to see such gains.

Anthropic launched a new AI model Thursday which it says is its "most intelligent model yet." The new model, Claude 3.5 Sonnet, is reportedly twice as fast as Claude 3 Opus, the company's previous best-in-class AI, and five times cheaper to run. Following a trend set by its competitor OpenAI--which just last month released the newest version of ChatGPT, GPT-4o--Claude 3.5 Sonnet is free for all users on the web and iOS to access. It has also been made available to developers. Claude 3.5 Sonnet is "now the most intelligent model in the world," claims Michael Gerstenhaber, a product manager at the company.

Ever get your McDonald's order mixed up at an AI-powered drive-through? The experiment behind the fast food giant's current automated order taker will soon be coming to a close. McDonald's confirmed Monday that it decided to end a global partnership with IBM, which has been testing this artificial intelligence technology at select McDonald's drive-throughs since 2021. That doesn't mean you'll never encounter some sort of chatbot while picking up fries on your car ride home again. While the IBM partnership for McDonald's current automated order taker test is winding down, the Chicago-based company suggested that it wasn't ruling other any other potential AI drive-throughs plans down the road -- pointing to "an opportunity to explore voice ordering solutions more broadly."

For the past three months, a small encrypted group chat of Latin American officials who investigate online child-exploitation cases has been lighting up with reports of raids, arrests, and rescued minors in half a dozen countries. The successes are the result of a recent trial of a facial-recognition tool given to a group of Latin American law-enforcement officials, investigators, and prosecutors by the American company Clearview AI. During a five-day operation in Ecuador in early March, participants from 10 countries including Argentina, Brazil, Colombia, the Dominican Republic, El Salvador, and Peru were given access to Clearview's technology, which allows them to upload images and run them through a database of billions of public photos scraped from the Internet. "Normally it takes at least several days for a child to be identified, and sometimes there are victims that have not been identified for years," says Guillermo Galarza Abizaid, the vice president in charge of partnerships and law enforcement at the Virginia-based nonprofit International Centre for Missing and Exploited Children (ICMEC), which organized the event. The group used the facial-recognition tool to analyze a total of 2,198 images and 995 videos, hundreds of them from cold cases.

Scarlett Johannson has gone to war with OpenAI, and in the battle for public opinion, OpenAI is losing--badly. Last week, OpenAI released an update of its AI chatbot called ChatGPT-4o, which featured a female voice talking to its users. Many people pointed out that the voice, which sometimes seemed to veer into flirtation, was eerily similar to Scarlett Johannson's in the 2013 dystopian sci-fi film Her. OpenAI CEO Sam Altman has long talked about how much the movie inspired the company's products, and even made the connection clear last week by tweeting the title of the movie. But on Monday, Johannson released a statement saying OpenAI had asked her to be the voice of the chatbot, and when she refused, they found a soundalike.

Today's artificial intelligence is often described as a "black box." AI developers don't write explicit rules for these systems; instead, they feed in vast quantities of data and the systems learn on their own to spot patterns. But the inner workings of the AI models remain opaque, and efforts to peer inside them to check exactly what is happening haven't progressed very far. Beneath the surface, neural networks--today's most powerful type of AI--consist of billions of artificial "neurons" represented as decimal-point numbers. Nobody truly understands what they mean, or how they work.