European Central Bank President, Christine Lagarde, addressed the European Banking Congress with her concerns about the state of Europe. Lagarde emphasized the growing signs of the global economy fragmenting into competing blocs, and the challenges posed by deglobalization, demographics, and decarbonization.
Lagarde highlighted the imminent decline in Europe’s working-age population, set to begin as early as 2025, and the escalating climate disasters. She stressed the need for massive investment in a short period, referring to it as a “generational effort”.
As new trade barriers emerge, Lagarde suggested a reassessment of supply chains, emphasizing the need to invest in new, safer, and more efficient ones closer to home. She also emphasized the deployment of new technologies to maximize productivity with fewer workers and the urgent need for advancing the green transition.
Lagarde explained estimates indicating that the green transition would require an additional annual investment of 620 billion euros ($672 billion) until the end of the decade, along with an additional 125 billion euros per year for digital transition. She also underscored the necessity for government intervention, citing the proposal for a capital markets union to mitigate the risks banks face.
The European Union’s official target for the capital markets union is to facilitate the free flow of money, investments, and savings across the EU, benefiting consumers, investors, and companies throughout Europe, regardless of their location.
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