ECB president urges global cooperation to address trade tensions

- European Central Bank and People’s Bank of China sign deal in Beijing to enhance cooperation

ISTANBUL

European Central Bank (ECB) President Christine Lagarde delivered a compelling speech in Beijing on Wednesday, emphasizing the urgent need for sustained global cooperation to navigate escalating trade tensions and prevent a mutually damaging fragmentation of the international economic system.

During a People’s Bank of China (PBoC) event, Lagarde highlighted that one-sided adjustments to resolve global frictions have consistently fallen short, often leading to unpredictable and costly consequences, the ECB stated in a press release.

Referring to the tariff wars that triggered the Great Depression in 1929, Lagarde said coercive trade policies cannot provide a sustainable solution to current tensions and suggested that everyone may need to make concessions for the global trade war to end.

Lagarde pointed out that interventions related to subsidies that have been disrupting global trade since 2014 have more than tripled, adding that China, the world's second-largest economy, is not alone in using subsidies and that other countries, especially in emerging markets, are also resorting to such measures.

Lagarde noted the dramatic changes in the global economy since then, including the emergence of trade tensions and a geopolitically charged landscape that impedes international cooperation.

She emphasized that, while the current incentive to cooperate may be reduced, the costs of failing to do so have now increased significantly, raising the stakes.

MoU signed to enhance cooperation

During the event, a memorandum of understanding (MoU) was signed between the ECB and PBoC to enhance cooperation.

Lagarde and PBoC President Pan Gongsheng signed the deal on cooperation in the field of central banking during Lagarde's visit to Beijing, the ECB stated.