Lagarde: The European Union has become vulnerable to threats to free trade.

During her speech at the European Banks Conference, which was held on Friday morning in Frankfurt, Germany, European Central Bank Governor Christine Lagarde warned of the trade risks facing the European Union, as it is the most open among major economies.

Lagarde pointed out that the region's economy has become increasingly exposed to rising threats to free trade, compared to other economies. This comes amid growing concerns about the trade war that could be triggered by the tariffs that Trump has pledged to implement.

On the other hand, she emphasized that the Capital Markets Union is key to making the European economy more dynamic and technologically advanced, but she noted a clear slowdown in the implementation processes.

Lagarde stated that household savings in the European Union do not enter capital markets in sufficient volumes, as they are concentrated in low-yield deposits. She also pointed out that savings that reach capital markets often remain confined within national borders, explaining that 60% of household investments occur in their own country or end up in the United States.

Lagarde noted that once savings are allocated by capital markets, they do not tend to go towards innovative companies and sectors, due to the underdeveloped venture capital ecosystem in the region.