European Central Bank President Christine Lagarde warned that global powers must cooperate or risk severe economic consequences, likening today's technological and geopolitical challenges to the 1920s. Speaking in Bologna, Italy, she cautioned that the world faces a critical choice between repeating past mistakes or embracing what she calls 'layered cooperation' to manage rising tensions.

Lagarde drew parallels between today's AI revolution and the technological breakthroughs of the 1920s, when post-World War I tensions disrupted global financial relations. She argued that as artificial intelligence becomes central to global growth, geopolitical fragmentation carries increasingly high costs. The ECB chief made these remarks amid escalating Middle East tensions following US and Israeli actions against Iran.

Lagarde proposed a three-step approach: reforming global institutions, deepening cooperation among allies, and finding ways to engage with rivals. She emphasized that even President Trump has a direct interest in avoiding fragmentation, as the alternative would be 'economic self-harm' for all major economies. The ECB president acknowledged that cooperation won't be easy but argued that layered cooperation provides the resilience needed in an era of systemic uncertainty.