Lagarde warns EU - "Overcome market fragmentation, or miss the artificial intelligence train"
"Europe missed the first digital revolution and cannot afford to miss it again with artificial intelligence, as it has the full potential to compete," said Christine Lagarde, president of the European Central Bank (ECB).
To win the artificial intelligence race against giants like the US and China, Lagarde told the World Economic Forum's International Business Council in Geneva that the EU must complete the single market and integrate capital markets that remain highly fragmented.
Lagarde's analysis largely echoes that of her predecessor, Mario Draghi, who in 2024 delivered a landmark report on relaunching the EU's economic competitiveness that pointed to artificial intelligence as Europe's last chance to rejoin the international technology race.
Following Draghi's advice, the European Commission has presented several initiatives to promote the use of artificial intelligence in strategic sectors, as well as funding massive data centers in an effort to develop new generations of technology.
In her speech, Lagarde stressed that access to capital is limiting Europe's investment in artificial intelligence, particularly because EU businesses obtain most of their financing through bank lending, while capital markets - the spaces where investors invest and firms raise capital - remain very limited at the national level.
“Legal fragmentation creates practical barriers for firms in terms of costs, time frames and their ability to operate across borders,” she said. As a result, a company in Europe faces more obstacles to expansion than a US-based rival, and may end up turning to capital markets outside the EU to solve the problem.
Lagarde added that Europe has the full potential to "make the most of new technologies" and that there are already "encouraging signs that European firms are investing in artificial intelligence."
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