date. for 2013, we expect growth of 1. 0 – 1. 5 %. while the gradual revival in the global economy is having a supportive effect, the strength of the swiss franc will hold back export momentum and corporate investment expenditure. domestic demand is also likely to be restrained over the next few quarters. in view of the modest pace of growth, production capacity in switzerland will probably remain underutilised in 2013. the rate of unemployment is likely to rise further. given the fragility of global conditions, the downside risks also remain high for switzerland. monetary and financial conditions i will now turn to monetary and financial conditions, which are almost unchanged as compared to the situation in summer 2012. interest rates in the swiss franc money market continue to fluctuate around zero. since mid - june, the three - month libor has fallen from some 9 basis points to only 1 basis point. interest rates in the repo market are predominantly negative. in addition, the yield on ten - year confederation bonds attained a new historical low. this shows that the demand for safe investments remains high. over the past few months, as before, movements in the swiss franc mainly reflected the changing risk assessment of market participants. following the ecb ’ s announcement in early september that it would purchase unlimited quantities of bonds of crisis - hit euro area countries under certain conditions, the upward pressure on the swiss franc lessened. the m1, m2 and m3 monetary aggregates, which measure the amount of money held by households and companies, have increased substantially over the past few months. for this reason, some fear that we are heading for high rates of inflation. however, this is not the case. the inflation forecast for switzerland continues to be low. at present, the inflation rate is still in negative territory. inflationary pressure remains minimal because of the strong swiss franc and the relatively unfavourable global growth outlook. moreover, the underutilisation of production capacities in switzerland is restraining the inflation outlook. surveys on inflation expectations show that households and companies continue to assume that prices will remain stable, also in the medium term. given the current low interest environment worldwide, enforcement of the minimum exchange rate is necessary to ensure suitable monetary conditions in switzerland. global uncertainty will persist for the foreseeable future and drive demand for secure investments. bis central bankers ’ speeches as a result the exchange rate situation will remain fragile, despite the calmer environment that has come about as a result of the

, my remarks today will focus on monetary policy. bis central bankers ’ speeches from markets in which they are no longer competitive, or relocate part of their production – and thus some jobs – to lower - cost countries, in order to keep pace with their foreign competitors. individual companies may even have to cease their activities in switzerland altogether. a study by the kof research institute shows that, following a swiss franc appreciation, the segment of lower - skilled workers in particular sees employment numbers fall. 3 however, the same study also points out that, despite pressure on margins, the remaining companies will respond to the franc ’ s appreciation by stepping up research and development, improving product quality and increasing the number of highly skilled workers they employ. over time, these measures should lead the industries concerned to become more productive overall. the majority of empirical studies for other countries confirm that, as a general rule, strong competitive pressure increases an industry ’ s productivity. 4 moreover, a number of country studies indicate that an appreciation can have a positive impact on productivity. 5 often, the relationship is reciprocal, with productivity gains themselves leading to a stronger currency. thus, in contrast to the short term, in the long term one cannot claim a contradiction between an economy ’ s competitiveness and a strong currency ( cf. chart 9 ). the fact that switzerland is among the world leaders in competitiveness, despite the strong swiss franc, confirms this finding. i ’ d like to illustrate the difference between the short and long - term consequences of a stabilityoriented economic policy with a classroom metaphor. in most school classes, there is a particularly enthusiastic pupil, the “ swot ”. for swots, the immediate effect of good academic achievement is negative, as they become excluded by the other pupils. should they perform less well, simply to avoid this unpleasant situation? in the short term, the result would be positive, but in the long term they would probably regret it. switzerland as an economic centre faces a similar dilemma. the result of the successful economic policy, and the associated stability, is that the swiss franc has a tendency to strengthen, demanding constant adjustment from companies and their workforces. so should switzerland throw its principles overboard and pursue an irresponsible financial and monetary policy? this would automatically reduce the pressure to appreciate and to adjust. and in the short term, that probably would bring some relief. however, in the medium and long term, such a policy would certainly come at the huge cost of