jean - pierre roth : the population is ageing - we cannot wait any longer! summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the association suisse des actuaires, basel, 17 june 2005. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * like other developed countries, switzerland has been hard hit by the phenomenon of demographic ageing. it is putting our old age pension scheme to a severe test. the ageing of the population is also impacting on our ability to innovate, our potential to achieve productivity gains and our competitive dynamism in a globalised and demographically diversified world. this is why measures need to be put in place quickly. at the heart of this demographic challenge lies the need to enhance the productivity of our economy as well as our productive capacity. it is all the more important to secure favourable growth conditions because the ageing of the population in itself could impact negatively upon our capacity for growth – which is under strain already now. increasing the productivity of our economy and the pace of growth is essential if we wish to maintain our system of social security. at the macroeconomic level, the financing of old age pensions works according to a simple principle. this involves imposing a levy on the incomes of the working population and transferring these funds to pensioners, either through redistribution in the present ( pay - as - you - go system ) or via a capital funding system which benefits future generations of senior citizens. thus, demographic ageing means that the working population is obliged to shoulder ever greater levies. if, at the same time, the global creation of wealth progresses slowly, the responsibility of financing old age pensions is going to impose an increasing social burden. thus, it is not only necessary to improve our economic efficiency, we also need to be careful not to impede these efforts through inappropriate measures. we must allow the invisible hand of competition to bring about the most efficient allocation of our resources possible in both the domestic and the foreign arenas. consequently, we need to do more with the resources at our disposal. at the same time, we need to make sure we have access to better quality resources. this means taking a longer - term approach to our system of education. the conditions within which our economy operates also play an important role. growth in investment activity not only allows us to create new jobs but also

philipp m hildebrand : developing countries and international capital markets summary of a speech by mr philipp m hildebrand, member of the governing board of the swiss national bank, to economiesuisse, zurich, 14 june 2005. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * after having plummeted on the back of the asian crisis, capital flows to developing countries have risen considerably again in the last three years. in 2005, they are likely to reach the approximate level at which they stood shortly before the asian crisis. capital flows are channelled mostly to a few emerging markets, notably china. china ’ s monetary order is currently undergoing profound changes, with the country gradually liberalising capital movements. the concept of the “ impossible trinity ”, which was developed by the nobel prize winner robert mundell, asserts that this will inevitably lead either to a loss in monetary autonomy or to a flexibilisation of the exchange rate regime. both trends can be clearly observed : the pressure on the fixed exchange rate on the one hand, and the rapid expansion of the monetary and credit aggregates on the other. in the longer term, china ’ s monetary order will probably move towards floating exchange rates. this transition will hopefully be successful. as china ’ s monetary policy of gradual change has so far proved its worth, it is likely to serve as an example to other developing countries.