MW ECB president explains to the world's largest fund manager why the 2020s resemble the 1920s
By Jules Rimmer
Europe lags behind the U.S. in most aspects of AI but in implementation of the technology it is competitive, says Lagarde
Christine Lagarde's term in office ends in October 2027 but there has been speculation she may step down earlier.
Christine Lagarde, the European Central Bank president, drew parallels between the 1920s and the 2020s in an interview with a leading fund manager.
Lagarde, ranked by Forbes as the world's second-most powerful woman - she says her son asked why she wasn't ranked first - discussed her global outlook with Nicolai Tangen, who manages Norway's sovereign wealth fund, the world's largest with $2 trillion in assets.
Tangen invited her onto his regular podcast that dropped on Tuesday and the jumping off point was Lagarde's analogy of the present era with the 1920s when the combustion engine and the manufacturing played the roles now occupied by the development and diffusion of artificial intelligence.
A century back, the world order failed to deal with geopolitical fragmentation and the destabilizing impact of new technologies, and it resulted in the epoch-defining financial crisis of 1929 that in turn, paved the way towards the second world war. Lagarde's warning, if the governments fail to put "the onus on diplomacy rather than war" and fail in "good financial management of public budgets" is stark: history will repeat itself.
Lagarde began her term as ECB president in 2019 and is set to remain in that post until her term ends officially in Oct. 2027. There have been recent rumors, however, that she might consider stepping down ahead of time. During her term in office, she's had to deal with Europe's well-advertised vulnerabilities, most notably in energy dependence and the demographic challenges of an ageing society.
As the most open of the global economies, Lagarde points out that Europe is, therefore, susceptible to spikes in energy prices, like that of 2022 and this most recent crisis with Iran. She points out that the Iranian war highlights the short-sightedness of Europe's lethargy in developing independent, green energy and emphasizes the urgency in developing nuclear energy capabilities as soon as possible.
Tangen asked her about her impatience with U.S. Commerce Secretary Howard Lutnick who criticized Europe recently at the Davos World Economic Forum. Lagarde walked out of a dinner he attended and commented, "(he) was not to me acceptable, so I left the room."
It's not the only thing with which Lagarde is impatient. One of her main complaints about the interaction between the ECB and European governments is that politicians focus on immediate public opinion and the next election, whereas central bank decisions can take six to twelve months to show results. Lagarde was clear: her mandate is to maintain price stability, and the independence of the ECB is sacrosanct, especially in contrast with the controversy over President Donald Trump's difficult relations with Fed Chair Jerome Powell.
Her other source of frustration was the pedestrian progress the ECB has made in its adoption of a digital euro (EURUSD). The pilot phase is expected in 2027 with a full rollout in 2029 as the world moves away from physical banknotes.
Lagarde was most insightful discussing the impact of technology, and especially the advent of AI. Lagarde notes that to some extent Europe was left behind the internet revolution, a failing that led to a productivity divergence with the U.S. that has never been fully closed. With AI, Europe is once again behind the U.S. but Lagarde notes that Europe is highly competitive in the "diffusion" of AI, integrating AI into manufacturing and industry.
Lagarde believes AI could be deflationary if it significantly boosts productivity, but there are counter-pressures resulting from the high energy costs of computing. Lagarde noted the tech has taken three years to develop momentum whereas electricity took three decades.
-Jules Rimmer
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March 24, 2026 07:58 ET (11:58 GMT)
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