ECB’s Nagel: Europe Must Build Its Own Strength in Defense, Markets, and Finance

4 November 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Tuesday urged Europe to act decisively to strengthen its security and economic resilience, warning that the continent could otherwise become a “plaything of the major powers” in an increasingly power-based world order.

Nagel, who heads the Deutsche Bundesbank, told the German central bank’s Capital City reception in Berlin that no European country was a global power on its own and that “[m]ore sovereignty is something we gain mainly by acting together.”

The EU’s single market gave Europe international weight, he said, but dependencies in critical sectors such as semiconductors and rare earths still weakened its position.

He called for faster progress on joint defense capabilities, saying that Europe must “build up its defense capabilities through its own efforts – and do so quickly.”

The EU should cooperate closely on large-scale armaments projects and move beyond fragmented national procurement systems, he said, welcoming the European Commission’s “Readiness 2030” plan to create a single market for defence products.

Effective common defence, he added, required coordination of equipment, personnel and strategy. Member States ready to move faster should do so, ideally together with like-minded non-EU partners such as the United Kingdom and Norway, he said. “The new security situation demands new answers,” Nagel declared.

Turning to Europe’s economy, Nagel said the continent must “train” its second major muscle – the single market – especially in strategic areas such as digital technologies, venture capital and payments.

He cited the need for both a savings and investment union and a digital euro, which would strengthen competitiveness and reduce reliance on non-European providers.

Around two-thirds of euro-area card payments currently go through non-European companies such as Visa and Mastercard, he noted. A digital euro would increase sovereignty in a critical infrastructure, he said, urging the European Parliament and Council to move ahead on a legal framework.

Quoting former Belgian Foreign Minister Mark Eyskens, Nagel concluded that while Europe had long been “an economic giant, a political dwarf and a military worm,” correcting that imbalance was now imperative.

“Looking at the weak points I mentioned earlier, we can see that the training is beginning to work,” he said. “What matters now is to keep at it and make Europe fit for its new global role.”