niklaus blattner : the demographic challenge – macroeconomic perspectives summary of a speech by mr niklaus blattner, vice - chairman of the governing board of the swiss national bank, at the conference " die alternde gesellschaft als sozio - okonomische herausforderung " ( the aging society : a socio - economic challenge ), university of basel, basel, 9 february 2007. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * demographic aging, i. e. the growing average age of the population, or the reversal of the age pyramid, is also a matter of concern for a central bank. without a careful analysis of the long - term developments in the real economy, any monetary policy assessment, and consequently any inflation forecast, will be inadequate. in addition to the activities in the money and capital markets, the longterm growth outlook – and thus also the population perspectives – are factored into the swiss national bank's monetary policy assessment. the aging of the population is a fact. it is linked to three main trends, which will greatly influence switzerland's demographic landscape in the decades to come : first, the economically active population will decrease, second, the old - age ratio, i. e. the ratio of people over 65 to those between 20 and 64 is on the rise, and third, longevity is increasing. in future, switzerland will have to produce more with fewer resources. " fewer resources " because the economically active population is declining, " produce more " because the old - age ratio is worsening and longevity increasing. the consequences for the macroeconomic outlook are clear : if labour productivity and / or labour input fail to improve, the impending demographic development will lead to slower medium and long - term growth. it is thus all the more important that labour productivity increases. the growth in labour productivity depends primarily on workplace capital and product market success. it would be ill advised, however, to make oversimplified calculations. neither technological progress nor capital investment are unaffected by demographic aging. while enthusiasm for embracing innovation may decrease with old age, greater experience can enrich human capital. on the one hand, a tighter labour market can be counteracted by shoring up investment. on the other hand, both the savings and the investment rate can decline. if foreign locations become more attractive, the latter is a particularly likely scenario. it is not clear how the

##ing these two vital pillars to the stability and prosperity of the economy, we have provided the best contribution to achieving higher economic growth. on the other hand, this would create an attractive surrounding for absorbing and accommodating foreign investment, and allowing the entry of new capital into the economy, which is vital to support the country ’ s economic activity and its credibility in the region and beyond. the bank of albania is committed to guaranteeing a sound banking system and efficient in channelling public savings into the economy. we will continue to carry out our periodic examinations to guarantee the banking system ’ s stability. sufficient capitalisation and capital quality remain our primary objective. i would like to guarantee the system that the bank of albania will take all the measures to supply with liquidity, while increasing the pressure for higher credit volume and improved quality. dear guests, i invite you to actively participate in today ’ s debate and discussions on issues that have been and will remain the focus and our common interest in the future. i invite you all to contribute, bis central bankers ’ speeches through presentations and discussions, to setting objectives our region will face in the future and solving the current challenges. thank you for your attention! bis central bankers ’ speeches