Notes: Data for the United Kingdom and the United States are derived from nominal bond yields deflated using inflation swaps. The Germany/EA figures are based on nominal Bund yield deflated using euro-area inflation swaps (as a proxy for the euro-area risk free rate). The measure of inflation used is RPI for the United Kingdom and CPI for the United States and the euro area. Data are to close of business 9 February 2015. BIS central bankers’ speeches  25  Chart 15: Population growth Annual percentage change 3  2  2050  2040  2030  2020  2010  2000  1990  1980  1970  1960  1950  1940  1930  1920  1910  1900  1890  1880  1870  1860  1850  1840  1830  1  0  Source: United Nations population projections (http://esa.un.org/wpp/) for 1950 onwards; The Maddison-Project (http://www.ggdc.net/maddison/maddison-project/home.htm) prior to 1950. Chart 16: Business expenditure on Research & Development South Korea  Japan  China  United States  United Kingdom  France  R&D Expenditure as a % of GDP  3.5 3.0  Germany  2.5 2.0 1.5 1.0  1981  1985  1989  1993  1997  2001  2005  2009  2013  0.5  Source: OECD.
Concluding remarks In closing, I would like to return to our decision of 15 January. Discontinuing the minimum exchange rate and reducing interest rates further are monetary policy measures for which there are no better alternatives. As I outlined previously, since the introduction of the minimum exchange rate in September 2011, the international currency relationships have changed fundamentally. In view of this development, a minimum exchange rate of CHF 1.20 per euro was no longer sustainable. Over the long term, adhering to the minimum exchange rate would have jeopardised the SNB’s ability to conduct monetary policy and fulfil its mandate in future. This would have saddled the Swiss economy with longer-term costs that would have been out of all proportion to the benefits of continuing to enforce the minimum exchange rate of CHF 1.20 per euro. With the international low interest rate environment, monetary policy faces big challenges. Overall, the Swiss franc is significantly overvalued. Negative interest helps to make investments in Swiss francs less attractive and thereby correct this overvaluation over time. The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions. Ladies and gentlemen, thank you for your attention. 4  BIS central bankers’ speeches