Lagarde urges Europe to strengthen its own artificial intelligence capabilities

Yesterday 09:15

By: Azzat Manal

Lagarde urges Europe to strengthen its own artificial intelligence capabilities

European Central Bank President Christine Lagarde has called on Europe to strengthen its domestic artificial intelligence capabilities, warning that heavy reliance on foreign technologies could create vulnerabilities for the region’s financial system and broader economic resilience.

Speaking in Frankfurt on Thursday at the European Systemic Risk Board’s annual conference, Lagarde said artificial intelligence is becoming increasingly important to financial institutions and markets. She argued that Europe needs greater access to advanced AI technologies and stronger domestic capacity to avoid excessive dependence on providers outside the region.

Lagarde has previously warned that many European companies are adopting AI technologies developed abroad, particularly in the United States. She said the possibility of losing access to advanced models could expose European businesses and financial institutions to significant disruptions.

The ECB president also highlighted the potential financial stability risks associated with the rapid expansion of AI. According to the ECB, generative AI is already widely used in the euro area’s banking sector, while financial-market firms are planning to increase their investment in the technology.

Among the areas of concern are financial-market trading, cyber resilience and geopolitical risks. Lagarde said the growing use of AI could amplify market movements and introduce new channels through which disruptions could spread across the financial system.

At the same time, the ECB has stressed that AI could deliver substantial economic benefits. Its research indicates that faster adoption could improve productivity, strengthen analytical capabilities and support innovation across the euro area. However, the central bank has also identified Europe’s dependence on foreign frontier technologies and its comparatively weaker investment environment as potential constraints on those gains.

Lagarde has argued that Europe should increase its computing capacity and investment in AI infrastructure while maintaining access to critical parts of the global technology supply chain. The ECB has noted that no single region currently controls the entire AI ecosystem, which spans advanced models, semiconductors, rare earth materials and specialised manufacturing equipment.

The debate comes as governments and financial regulators around the world examine how the rapid development of AI could affect economic competitiveness, cybersecurity and financial stability. Lagarde has also stressed the importance of international cooperation to ensure that increasingly powerful AI systems are developed and used within appropriate safeguards.