Single market scale needed to close AI gap with US and China
Europe must integrate its capital, energy and digital markets to compete effectively in artificial intelligence against the United States and China, according to a speech published by the Bank for International Settlements.
Three pillars for technological scale
Europe currently relies heavily on foreign providers for critical artificial intelligence infrastructure, with the six highest-scoring model developers globally based in the United States and China.
To overcome fragmentation across 27 separate national markets, the speech outlines three essential priorities for European policymakers.
First, the European Union must mobilize private savings through the Savings and Investments Union to supply venture capital for growing startups.
Second, massive computing capacity requires cross-border energy grid interconnections to ensure affordable, clean electricity.
Third, completing the single market in services and digital goods enables innovative firms to achieve global scale.
Lessons from nineteenth-century Berlin
The speech draws a historical parallel to museum director Wilhelm von Bode in 1880s Berlin, who built European networks of public institutions and private capital to match global standards.
While Europe educates top-tier researchers and holds extensive industrial data, structural barriers prevent full commercialization.
For central bankers, artificial intelligence directly influences productivity, labor markets and inflation dynamics, while projects like the digital euro bolster financial sovereignty.
Right diagnosis, familiar hurdles
The analysis correctly identifies capital fragmentation as Europe's main technological barrier.
Yet invoking the Savings and Investments Union reiterates an old ambition that national governments routinely delay.
Without concrete implementation, Europe will stay locked into foreign digital dependencies.