ECB President Warns of Fragmentation in Global Economic Order

(MENAFN) European Central Bank (ECB) President Christine Lagarde expressed concern on Monday about the increasing disintegration of the multilateral framework that has long governed international trade and the global economy.

She highlighted the rise of protectionist policies and one-on-one power dynamics, which are replacing collaborative global approaches.

Lagarde noted that the multilateral system, in place for over eight decades, had allowed the global economy to prosper through openness and collective cooperation, largely driven by American leadership.

She emphasized, "By championing a rules-based international system and anchoring the dollar as the world’s reserve currency, the United States set the stage for trade to flourish and finance to expand."

This global order, she added, significantly benefited the European Union, "whose founding liberal principles aligned seamlessly with it."

However, Lagarde pointed out that this long-standing cooperation is now being eroded by emerging attitudes of “zero-sum thinking and bilateral power plays,” as countries move away from openness in favor of economic self-interest and restrictive trade policies.

She also raised doubts about the enduring role of the US dollar, describing it as "the cornerstone of the system."

Lagarde warned that this increasing divide could threaten the European economy, which is heavily embedded in the global trade network.

She noted that exports represent approximately 20 percent of the EU’s value added and sustain around 30 million jobs.

Any move toward reduced global commerce or the development of separate economic spheres would, according to her, "be detrimental to our economy."

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