European Investment Bank (EIB) Warns Of A €10bn Investment Gap In Blockchain And AI
The European Investment Bank (EIB) says that Europe will experience a €10 billion shortfall in the coming months in blockchain and artificial intelligence investment.
EU Is Falling Behind China And the US
A report published by the EU bank titled “Artificial intelligence, blockchain and the future of Europe” said that the US and China account for 80% of the €25bn of annual equity investments in AI and blockchain technologies.
The EU, on the other hand, is billions of dollars behind as it only makes up 7% of the investments, which totals €1.7bn.
The report includes reasons for the EU's investment gap in the blockchain and AI sectors. One cited is the limited enthusiasm to invest due to high upfront investment needs, the lack of knowledge and specialization of EU venture capital funds, and SMEs' difficulty connecting with investors.
Another reason for this gap is the limited role of large institutional investors such as pension funds, insurers, and endowments in financing later-stage startups involved in AI and blockchain.
The bank said that European countries were underinvesting in both sectors, which meant that the EU has failed to translate scientific knowledge into business models that can be applied. The report stated,
“Companies and governments in Europe are substantially underinvesting in AI and blockchain compared to other leading regions, and it has become clear that the European Union struggles to translate its scientific excellence into business application and economic success.”
The bank further said it expected investments in both technologies to contribute to the global COVID-19 recovery across sectors from healthcare to financial services. It added that private markets would be required to give extra funding if the EU intended to keep pace with global competitors.
Europe Continues To Experiment With Blockchain And AI
Despite the investment shortfall depicted by the EIB, financial institutions within Europe are experimenting with blockchain and AI technology.
For instance, the Banque de France has been using blockchain to run pilot tests for a central bank digital currency (CBDC). The French Central bank recently revealed the issuance of a 100 million euro bond on the Ethereum blockchain as part of a trial for a CBDC.
In terms of AI technology, Europe is making plans. In April, the European Commission announced that it would turn Europe into a global hub for trustworthy AI – with the first-ever legal framework on AI and a new coordinated plan with member states.
Meanwhile, the EU has several AI and blockchain SMEs. Currently, Paris and Berlin own the largest hubs of these SMEs in Europe, closely followed by Amsterdam, Barcelona, and Madrid.
However, the highest number of companies in these sectors are located in Germany and Austria.