Lagarde Warns Fragmented Market Threatens Europe's Global AI Ambitions
European Central Bank President Christine Lagarde has warned that Europe risks losing its opportunity to compete globally in the artificial intelligence (AI) sector due to market fragmentation. Speaking at the International Business Council of the World Economic Forum in Geneva, she emphasized that a unified single market and unification of capital markets are crucial for Europe's success.
Lagarde cited the need for scale as emerging technologies drive productivity growth, stating that access to capital restricts Europe's AI investments. She noted that EU enterprises rely heavily on bank loans, while capital markets remain small and localized, generating legal disparities that hinder cross-border operations.
The ECB president highlighted that Europe has significant capacity to capitalize on new technologies, with promising indications of European companies investing in AI. However, she argued that transforming expertise into commercial success is a critical task, as obstacles hindering company scaling impede technology adoption throughout the economy.