FRANKFURT, Germany, Nov 23, 2024 (BSS/AFP) - ECB chief Christine Lagarde on Friday stepped up calls for greater financial integration in Europe, warning of threats to free trade and of a growing gap with the United States.

In a speech in Frankfurt, where the European Central Bank is headquartered, Lagarde warned that "the geopolitical environment has become less favourable, with growing threats to free trade from all corners of the world."

"Europe's declining innovation position has come more clearly to light. The technology gap between the United States and Europe is now unmistakeable," she added.

These factors meant that "the urgency to integrate our capital markets has risen", she said.

Donald Trump's looming return to the White House is causing jitters across Europe due to the president-elect's threat to hike tariffs on all imports into the United States.

He has singled out the EU, and its sizeable trade surplus with the United States, for particular criticism.

In her remarks Lagarde was referring to the "capital markets union", a project long championed by the ECB aimed at helping the single currency area better compete with major economies like the United States.

But she warned that the project was at risk of suffering "death by a thousand cuts".

Problems arose from a "loose definition" of capital markets union and "the piecemeal legislative approach this creates", she said.

Since 2015 numerous proposals had been put forward with regard to the project, but this allowed it "to be picked apart by national vested interests that see one or another initiative as a threat," according to Lagarde.

As a key step, Lagarde suggested the introduction of standardised, EU-wide savings products to encourage Europeans to invest more and across borders, and shift assets out of cash and bank deposits.

Most European savings stay in the savers' home countries due to fragmented markets, she said, with institutional investors preferring US markets over EU ones.