Christine Lagarde: A new global map - European resilience in a changing world

Speech by Ms Christine Lagarde, President of the European Central Bank, at the Peterson Institute for International Economics, Washington DC, 22 April 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

It is a pleasure to be in Washington to speak with you today.

The economic fallout from Russia's invasion of Ukraine may mark a defining moment for globalisation in the 21st century.

Russia's unprovoked aggression has triggered a fundamental reassessment of economic relations and dependencies in our globalised economy. And in a post-invasion world, it has become increasingly untenable to isolate trade from universal values such as respect for international law and human rights.

Throughout human history, economic relations and values have fundamentally shaped how we understand and interact with the world. This point is well captured by those world maps from Medieval times.

These mappae mundi, as they are known, depicted world views informed by trade links and value systems. Well-trodden trade routes from ancient times meant that Asia and North Africa figured prominently in them. Mappae mundi, like the famous Ebstorf Map, often portrayed the holy city of Jerusalem at the centre of the world.

Today, rising geopolitical tensions mean our global economy is changing. And once more, fluctuating value systems and shifting alliances are creating a new global map of economic relations.

It is still too early to say how this will play out, but one can already see the emergence of three distinct shifts in global trade. These are the shifts from dependence to diversification, from efficiency to security, and from globalisation to regionalisation.

These shifts have implications for Europe. And we must respond accordingly if we are to thrive in this new and increasingly uncertain global terrain. But that does not mean restricting open trade. Rather, we must work towards making trade safer in these unpredictable times, while also leveraging our regional strength.

That will not be easy. But as Christopher Columbus once said, "You can never cross the ocean until you have the courage to lose sight of the shore."