Lagarde Warns EU Must Overcome Market Fragmentation for AI Success

European Central Bank (ECB) President Christine Lagarde has warned that Europe must overcome market fragmentation to remain competitive in the artificial intelligence (AI) race. Speaking at the World Economic Forum's International Business Council in Geneva, Lagarde stated that the EU cannot afford to miss the AI train like it did with digital technology.

Lagarde emphasized that access to capital is a significant limiting factor for European investment in AI, particularly since many businesses rely on bank lending rather than capital markets. She noted that legal fragmentation creates practical barriers for firms, making it more difficult and costly for them to operate across borders.

The ECB President added that Europe has the potential to 'make the most of new technologies' and cited encouraging signs that European firms are investing in AI. However, she stressed that the EU must complete the single market and integrate capital markets to stay ahead of rival nations like the US and China.