1 Introduction

Ladies and gentlemen,

It’s a pleasure to participate in this conference. 

Innovation is undoubtedly a crucial issue for Europe at this juncture. As the Draghi report has laid bare, Europe is struggling to generate and scale productivity-boosting innovation. This is an important factor behind its weak productivity and growth performance. The report talks about a “…static industrial structure which produces a vicious circle of low investment and low innovation”. I therefore highly welcome our discussion on how Europe can accelerate innovation to foster growth. 

Why do I consider this to be an important topic as a central banker? First, productivity-boosting innovation affects economic growth and inflation. Second, some of the barriers to innovation lie in areas where central banks have substantial expertise. And third, through our actions, we central bankers can help strengthen trust in the financial system and in the broader economic environment.

2 Single Market and capital markets

What levers do we have to stimulate innovation and drive growth in Europe? I will name three. 

Before I do so, let me clearly state: I do not believe that the main obstacles are a shortage of talent or a lack of innovative ideas. Europe has many strengths it can build upon: talent, innovative ideas, a high degree of political stability and a strong, reliable legal framework, providing the predictability and security needed for long-term investment, innovation, and economic growth. But Europe is struggling to help innovative firms scale up and grow into globally competitive companies. How then can scaling-up become simpler in Europe?

My first lever is Europe’s Single Market. Regulatory and administrative barriers should be identified and lowered where necessary.

My second lever is access to funding. In order to mobilise investment in innovative firms, we need to make further progress towards a savings and investments union. Recently, the AI model maker Mistral raised a record 3 billion euro in funds. Great! Yet, Anthropic in the United States raised 100 billion USD this year. Compared with the United States, Europe has a less developed venture-capital market, which puts innovative European firms at a disadvantage. 

3 Infrastructure

The third and final lever is to improve Europe’s infrastructure. Infrastructure has many facets. In times of AI, cloud and quantum computing, sufficient, reliable and sustainable energy grids are increasingly proving to be critical infrastructure. It has also been emphasised from various sides that information and communication infrastructure is needed to connect all this. Here we’re talking about storage, computing power and fibre optic cables in particular. Mario Draghi wrote an important opinion article on this topic that was recently published in the Financial Times.[1] And Christine Lagarde just emphasised the importance of closing Europe’s “data center gap”.[2]

Last, but not least, a strong education system and successful basic research are essential parts of our European infrastructure. These build human capital, expand the foundations of knowledge and enable future innovation. Investing in both is therefore crucial for long-term economic competitiveness, technological progress and societal resilience.

4 Conclusion

My takeaway from the history of innovations since the steam engine: Personal initiative and the ideas of individuals are the driving force. Sustained and broad-based innovation is most likely to flourish where personal initiative, entrepreneurial dynamism and competitive markets can thrive. The public sector’s key role is to provide reliable framework conditions and to act as an enabler where market failures are clearly identified. 

Europe’s innovation challenge is not a shortage of ideas. It is above all a challenge of scaling, financing and providing common European infrastructure. Policy can make an important contribution by providing a stable, predictable and innovation-friendly environment. An environment where people can trust that innovation can and will happen – to the benefit of all citizens in Europe. 

Footnotes:

1.  Financial Times (2026), Europe’s difficult choices on AI, opinion article by Mario Draghi, 11 September 2026.
2.  Christine Lagarde, A new age of capital: growth, sovereignty and AI, speech at “Hofburg im Dialog – Economy, Europe, Resilience” in Vienna, Austria.