banks have moved to an implementation framework centred on steering short - term interest rates. like other equilibrium concepts – such as potential output or the equilibrium exchange rate – r * is unobserved and has to be estimated. empirical estimates of r * should satisfy the following requirements : r * estimates should be unaffected by cyclical and short - term movements in economic aggregates ; and they should not depend on monetary policy, reflecting the principle of the long - run neutrality of money. 3 thus, r * estimates should only reflect real and longer - term – i. e. structural – changes in the economy. at the snb, we use a wide range of models to estimate r *. some focus on potential growth as a determinant of r *, while others distinguish between domestic and international factors that affect r *. we also use financial market expectations of real interest rates in the long run as a measure of r *. in chart 2, we see a range of estimates from these models for switzerland. the downward trend of r * in switzerland is similar to that in other countries. the range was fairly narrow before the covid - 19 pandemic. since the pandemic, however, it has widened. r * estimates are subject to considerable uncertainty. let me highlight two sources of this. the first is uncertainty about the ‘ right ’ model. chart 2 shows us that the estimates from the models can differ substantially at times. the second is the statistical uncertainty surrounding cf. wicksell ( 1898 ). some have argued that monetary policy itself may have caused the persistent downward trend in r *. cf. schnabel ( 2024 ) for an overview of the arguments. page 3 / 11 the estimate of a specific model. this is evident from the occasionally wide statistical confidence bands around point estimates. 4 the uncertainty surrounding r * estimates complicates their use in the monetary policy process. nevertheless, neglecting r * in practical monetary policy considerations would be a mistake. monetary policy decision - making with uncertain r * therefore, i would like to address the question as to how monetary policymakers can deal with the uncertainty surrounding r * estimates in practice. i will first discuss how to arrive at a measure that can be employed usefully in the monetary policy process despite this uncertainty. i will then explain how both our monetary policy framework and our risk management approach help us deal with uncertainty. policy - relevant r * estimate given the substantial statistical uncertainty surrounding r * estimates, it is important

in euros. swiss suppliers have increasingly been requested to provide euro - denominated invoicing. it is unclear to what extent inter - company payments in switzerland are effected in euros. there is agreement, however, that these payments have increased compared with last year's survey and that this trend is likely to continue in future. wage and salary payments in euros are still not an issue. employees would not accept wage and salary payments in euros. furthermore, such a practice would result in substantial administrative complications ( social security deductions and taxes in swiss francs ). the selective use of euros in place of the swiss franc does not create any difficulty with regard to monetary policy. on the one hand, the bulk of payments in switzerland will probably continue to be effected in swiss francs also in future. on the other hand, under the current monetary policy strategy, a possible euro - induced decline in the demand for money will not lead to any problems either. contrary to the previous policy of targeting the money supply, the steering of the interest rate the national bank pursues today is not dependent on a stable demand for money. the national bank realises, however, that, as invoicing in euros becomes more widespread, our export industry must bear higher exchange rate risks.