Christine Lagarde: A new age of capital: growth, sovereignty and AI

Speech by Christine Lagarde, President of the ECB, at “Hofburg im Dialog – Economy, Europe, Resilience” in Vienna, Austria

Let me begin with a story that starts in this city.

In this country, the years before 1873 have a name: the “Gründerzeit”, or “founders’ era”.

The old city walls had come down and the Ringstrasse was rising where they had stood. Railways were pushing out across the empire. New banks and joint stock companies were being founded by the hundred.

But money did not stop at borders. On a scale never before seen, savers in Vienna, Berlin, Paris and London could lend abroad. Their money went into the transformative technologies of the day. French savers financed the Suez Canal. Larger sums still went from British and German savers into the American railways.[1]

The historian Eric Hobsbawm called these decades the age of capital.[2]

In 1873 that age came to an end. Eight days after the Emperor opened the World Exhibition in the Prater, the Vienna stock exchange collapsed, and four months later Wall Street followed.

The crash hit both continents. But what the money had built stayed in the United States, and so did the growth. By the end of the century, the US economy was the largest in the world, while Europe went through two decades of slow growth.

Today, European savers are again financing the transformative technology of the age: artificial intelligence. Again, most of the money is flowing to the United States. Euro area households hold about €440 billion in US technology firms.[3]

The question I want to ask today is whether, this time, Europe will get its share of the benefits. I believe it can. But only if we are clear about why we need this technology, why we cannot simply buy it, and why part of it must be built here.

Europe is often criticised when it comes to technology: good at running and regulating an advanced industrial society, but weaker at putting new digital tools to work. With AI, the picture is already different. Things are moving.