Digitalisation, in particular, can increase productivity growth: Germany has work to do in this area, Executive Board member Fritzi Köhler-Geib said at a panel discussion held at the Bundesbank’s Regional Office in Hesse. There, she spoke with Kristina Sinemus, Hesse’s Minister for Digitalisation and Innovation, and Claudia Nemat in her capacity as a tech entrepreneur, about how economic growth could be boosted in Germany. The event was moderated by Karen Funk, IT specialist journalist.

Pronounced weak growth

Köhler-Geib stated that Germany’s economic growth had slowed significantly over the past few years. In her view, the reasons for this included increasing labour shortages, the slow pace of digitalisation and unfavourable conditions for enterprises, for example. These are structural barriers that stand in the way of a steeper growth path, Köhler-Geib stressed. 

Build on start-up impetus

Start-ups can open up markets in the technology sector and become the growth engine of tomorrow, explained Köhler-Geib. Start-up activities in Germany had increased recently. Now it was a matter of building on this and improving conditions for start-ups. Bureaucratic hurdles and the low volume of venture capital investment in Europe were among the obstacles currently preventing more start-ups from being founded. 

In the discussion, Sinemus stressed that, in addition to reducing bureaucracy, processes needed to be digitalised at the same time, so as not to slow enterprises down. Nemat stated that a deep European capital market was also crucial for growth.

Digitalisation as the key to growth

The Bundesbank Executive Board member saw potential for economic growth, especially in the digital sectors. A Bundesbank study showed that these sectors had made considerable efficiency gains relative to other economic sectors in the past. In addition, a Bundesbank panel demonstrated that more and more firms were using AI, and that the average working hours in which AI was used were increasing. 

According to Köhler-Geib, the Bundesbank was also relying on AI and innovation management in order to remain future-proof: With these future technologies, it is crucial that we apply them in Europe and, at the same time, ensure that we invest in the ecosystem both here in Germany and throughout Europe as a whole. At the Bundesbank, that’s precisely what we’re doing. For example, she continued, the Bundesbank was operating its own data centre and using AI productively in many areas, such as reporting and risk control. In addition, a central bank team was working on quantum-safe encryption, also in cooperation with start-ups. Central banking is technology, the Executive Board member said. 

Manage digital dependencies strategically

According to Köhler-Geib, Europe was highly dependent on non-European providers in many areas: More than 80 % of digital infrastructure and technologies are imported. In her view, Germany needed to consider which dependencies Europe was consciously maintaining and which it wanted to reduce or dissolve: At the Bundesbank, we are pursuing a dual strategy: on the one hand, we are expanding our innovative capacity, and on the other, we are strategically managing dependencies and targeting sovereign European offerings and open source solutions in order to become more independent.

In Köhler-Geib’s opinion, technological independence and capacity to innovate must go hand in hand in order to ensure resilience and future viability. Although she stressed that This transformation is not self-evident, it would open up a vast amount of opportunities.