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On Tuesday, 18 March, the Bundestag approved a reform of the German Basic Law to permit the issuance of new debt on a scale never seen before. Politicians justify the move by citing the need to make Germany more resilient – particularly in defence and infrastructure. While these priorities are undoubtedly important, focusing solely on fighter jets and the repair of crumbling bridges paints an incomplete picture. To truly secure the future, targeted investment in digital innovation must be part of the equation.

The topic of digitalisation appears in three places in the CDU/CSU and SPD exploratory paper. First, the establishment of an investment fund is planned. It is intended in part to promote venture capital. However, the mechanism for achieving this, particularly through a state guarantee, remains vague. Second, research and development funding is set to increase significantly under the banner of a “high-tech agenda for Germany”. Yet, while the ambitious goal of developing a fusion reactor takes centre stage, artificial intelligence (AI) is mentioned only in passing. Third, the paper outlines plans for a digital citizen account to streamline administrative procedures, integrate data registers and automate processes.

In short: promising initiatives – but insufficient to truly advance the country’s digital transformation. Germany’s digitalisation efforts, particularly in the financial sector, remain at an early stage. And yet, the untapped potential is immense. A recent McKinsey study estimates the market opportunity for digital assets in the EU and Switzerland at between just under EUR 1 billion and more than EUR 3.7 billion. But realising this potential hinges on two critical factors: a supportive regulatory framework and a functioning digital infrastructure. Neither is currently in place.

The next German government should place greater emphasis on strengthening the framework for a robust European capital market and prioritise tokenisation as a key growth driver. On the investment side, it should commit to building a high-performance cloud infrastructure. Not only would this support digital innovation, but it would also reduce Germany’s reliance on increasingly unstable partnerships with the United States – a risk that has so far received too little attention. For similar reasons, targeted support for AI start-ups is essential. As demonstrated by Deepseek, even smaller players can challenge the dominance of US tech giants. German or European alternatives could also help overcome the trust issues AI still faces domestically.

At the same time, the government must do more to promote the use of artificial intelligence in business. To date, public funding has largely focused on research and model development. While this is a necessary foundation, it is not sufficient. Real economic value arises when AI is applied in business operations. Without dedicated support, the adoption of AI by German companies is unlikely to gain significant momentum on its own.

Equally important is accelerating progress toward a functioning European Capital Markets Union. Three aspects are especially urgent: First, the revival of the securitisation market. According to the McKinsey study referenced above, tokenised securitisations could exceed the value of cryptocurrencies, with a best-case scenario of over EUR 1.5 billion. Second, financial market supervision must be harmonised. Although ESMA provides overarching guidance, national regulators still apply rules differently, making cross-border activity unnecessarily complex. Third, tax regulation across EU member states must be aligned. If uniform tax rates are not possible, at the very least a common structure should be established. This alone would mark a significant improvement over the current fragmented system.

Given the exploratory paper’s heavy focus on defence and infrastructure, I fear that digitalisation could be left behind. For this reason, I would also strongly advocate the creation of a dedicated Ministry for Digital Affairs. Such a ministry should not only define digital strategy and goals but also be responsible for implementing and monitoring them. If each department is left to manage its own digital budget in isolation, we risk ending up with a fragmented, inefficient patchwork. That would be another missed opportunity – only this time, one with a trillion-euro price tag.