European Central Bank Council Member Nagel: AI will become the "touchstone" for Europe's future.

On Wednesday local time, Joaquim Nagel, a member of the European Central Bank's Governing Council and President of the German Central Bank, stated in Berlin that artificial intelligence (AI) will become a "touchstone" for determining whether Europe can unite and fully unleash its potential. He emphasized that the world is undergoing "profound changes" in both geopolitical and technological realms, and that Europe needs to come together while "considering competitiveness and sovereignty issues simultaneously." "AI could become a touchstone," he remarked at a dinner during the European Central Bank's external governing council meeting in Berlin, "AI has transformative power and profound implications for Europe, especially in terms of the economy and security." So far, the economy of the eurozone, which consists of 21 member countries, has shown unexpected resilience in the face of shocks such as the Iran war, and it is expected to accelerate further. However, European Central Bank officials generally believe that strengthening the economic foundation of the eurozone is urgent. Currently, policymakers are particularly concerned about low productivity and weak potential growth, and they are actively calling for further advancement of the European integration process. At the same time, European Central Bank officials have warned that Europe must not fall behind in the wave of global economic transformation led by AI. ECB President Christine Lagarde stated earlier this year that Europe still has the opportunity to capture the AI dividend, as the greater economic value may not lie in producing these technological tools themselves, but rather in applying them broadly across the economy. In his speech on Wednesday, Nagel also attempted to boost confidence. He stated that Europes starting point in the field of AI is "better than many think." He listed Europe's advantages: it has world-class universities that train a large number of global AI talents; relevant industries possess "data repositories that may be extremely valuable for AI development"; additionally, Europe's large pool of private savings can provide funding support for AI innovation and infrastructure development. However, Nagel made it clear that if Europe truly wants to become a global leader in AI, "decisive action must be taken now." He pointed out that Europe needs to increase the supply of venture capital, establish sufficient computing power capabilities, and build a genuinely integrated market so that innovative enterprises can scale up quickly. "In fields where scale determines success or failure, actions at the national level alone are likely to fall short," Nagel emphasized, "In this case, collective action at the European level is the approach that aligns most closely with the interests of each country." Lagarde also spoke at the event, reiterating that Europe must work collaboratively to confront global headwinds, emphasizing that "we can only rely on ourselves." She pointed out, "If our advantages in one area, such as the single market, are undermined by weaknesses in other areas like defense or a fragmented and high-cost energy market, we could easily be divided and ruled. But if we can take meaningful action together, we can maintain our scale and reduce the impact of external pressures. At that point, we will have more sovereignty and faster growth." It is noteworthy that against the backdrop of Brent crude oil futures prices surpassing $101 per barrel, the market widely expects the European Central Bank to raise interest rates by 25 basis points at Thursday's meeting. Traders are ramping up their bets on an interest rate hike by the ECB, as rising energy prices may make it difficult for inflation to ease in the coming year. The swap market currently indicates that traders expect the ECB to raise rates by about 90 basis points by December 2027, marking the highest level since the current tightening cycle began. This means that policymakers may need to raise rates three times during this period, each by 25 basis points, with a 60% probability of a fourth increase.