Frankfurt (AFP)

The new President of the European Central Bank (ECB), Christine Lagarde, on Friday called on Europe to "innovate and invest" in the face of economic and climate challenges, insisting in its first official speech on the importance of this effort.

If European countries "stimulate growth by investing in productive sectors of the economy", they will support the demand while ensuring the "maintenance of (their) competitiveness" to more "long term", said the French during a banking congress, outlining the fabric of its future monetary policy interventions.

Ms Lagarde, whose term of office began on 1 November to replace Mario Draghi, underlined how flexible monetary policy adopted by the ECB "has been a determining factor in domestic demand during the recovery" in the euro zone.

"But it is clear that monetary policy could reach its (inflation) target faster if other policies supported growth," she said, calling for "progress towards a new European political mix."

In his view, national fiscal policies are "a key element", not only by the size of public spending but by their composition, which should favor investment for a "more productive, more digital and greener common future".

At the European level, the InvestEU program that will take over the Juncker plan from 2021 "is a good start," she said, calling also companies to invest "to increase productivity."

The euro zone "has been slower to capture innovation and take advantage of the digital age" than other economies such as the United States, summed up Ms. Lagarde.

"This message is probably aimed at a mainly German audience" Friday, commented Carsten Brzeski, economist at ING.

Germany, which has staked budget surpluses since 2014 and is facing economic stagnation this year, is regularly asked by its partners to spend more.

Christine Lagarde also announced that an upcoming revision of the ECB's strategy would intervene, while the effects of cheap money policy to support growth and prices will remain under surveillance.

"At the moment, Lagarde meets expectations" by becoming "the main economic and political voice of Europe", but does not seem willing to "shake the ECB quickly," says Brzeski.

© 2019 AFP