European Central Bank President Lagarde urges EU to build system power by pooling strategic policies and advancing the digital euro

The European Central Bank published a speech by President Christine Lagarde arguing that Europe must adapt to an era of “system power”, where control over critical technologies, infrastructures and financial networks can be used as leverage, and that safeguarding independence requires reducing asymmetric dependencies. Lagarde set out three priorities: pooling strategic policies at European level to achieve scale, greater coherence across economic, energy, defence and financial instruments, and building coalitions. On pooling, she cited gaps in Europe’s capacity in semiconductors, batteries and artificial intelligence, including the European Court of Auditors’ view that the EU is “very unlikely” to reach a 20% global semiconductor production target by 2030, and argued for extending qualified majority voting to enable Europe-wide decisions. On coherence, she pointed to vulnerabilities exposed by threats to restrict access to the United States financial system and by Europe’s prior dependence on Russian gas, and highlighted steps to strengthen the international role of the euro, including a digital euro that would provide a sovereign alternative to foreign payment systems while still awaiting a legislative act. For coalitions, she advocated reinforcing the International Monetary Fund and the World Trade Organization as anchors of an open system, alongside “coalitions of the willing” and like-minded partnerships to secure inputs such as raw materials, advanced chips and digital infrastructure.