Lagarde states that Europe can succeed in artificial intelligence through application rather than innovation

2026-02-24 12:16:20

Investing.com - European Central Bank President Christine Lagarde said on Monday that Europe does not need to be at the forefront of developing frontier models to benefit from artificial intelligence.

Speaking in Washington, Lagarde stated that greater economic returns might come from applying AI tools across a broader range of economic sectors rather than producing these tools themselves, especially in manufacturing and industrial processes.

Lagarde noted that Europe has a strong starting point in this area, citing a survey showing that EU manufacturing companies are ahead of their American counterparts in using AI, big data, and deploying robotic technologies.

Lagarde said that Europe’s industrial base is sometimes seen as a legacy of the old economy, but it could become its most valuable asset.

“Europe is a sleeping giant. Its potential is enormous, but the changes needed to unlock that potential are not significant,” Lagarde said. She added that the current question is whether Europe can address its long-standing structural weaknesses with the same resolve, even without the pressure of a crisis.

Lagarde expressed her belief that Europe will take action, not out of innate optimism, but because the costs of inaction are now impossible to ignore, and the necessary steps are within the region’s capabilities.

The ECB President stated that investors have not overlooked this potential. Lagarde said that if EU households adjusted their margin-to-financial-asset ratios to match those of American households, up to €8 trillion ($9.4 trillion) of existing funds could be reallocated into long-term market-based investments, or over €350 billion annually in capital flows.

Europe is considered to lag behind the US in AI adoption and innovation. Former ECB President Mario Draghi pointed out in a 2024 report that one key reason for the region’s weak productivity is its failure to benefit from the first digital revolution, while the US and China have moved ahead.

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