Specifically, France has recently lengthened the period  BIS Review 51/2009  3  for calculating the pension entitlement from 10 to 25 years, while Austria has extended it from 15 to 40 years and a significant number of countries (Finland, Poland, Portugal and Sweden) have extended it to cover the entire working life. This reform would be in line with the recommendations of the Toledo Pact and would increase the system’s proportionality, i.e. the relationship between pensions received and contributions made. Connected to this issue, there would be a possibility in Spain of furthering the reforms in recent years aimed at bringing the different Social Security schemes onto a more equal footing, so as to ensure that the contributions made under the different schemes are similar. Thirdly, some countries have lowered the income replacement rate, defined as the net pension divided by net income prior to retirement, by reducing the percentage of the regulatory base received after having contributed for the minimum period (currently set at 50%), by extending this minimum period or by reducing the rates with which this initial percentage increases for each additional year of contributions. A more novel alternative has involved linking pensions to life expectancy. Insofar as part of the problem arises as a result of the rise in life expectancy, adjusting pension amounts more or less automatically to these increases would be conducive to the sustainability of the system. Currently, this type of measure has been proposed or applied, to differing degrees, in almost half the OECD countries.
On the one hand, this appreciation put Switzerland’s price competitiveness under severe pressure in the short term, and I’m sure I don’t need to go into detail on the practical repercussions for individual companies in a forum such as this. The impact is still being felt at many of your organisations, although Swiss firms have once again proved impressively flexible and resilient. On the other hand, the decision last January was absolutely necessary, given that the euro lost considerable ground against all major currencies as a result of the changed international environment. Waiting any longer would have put the minimum exchange rate under permanent pressure. The minimum exchange rate had become unsustainable. The costs associated with continuing such a policy would thus no longer have been justified. Moreover, had we discontinued the minimum exchange rate at a later date, the impact on the Swiss economy would have been even greater. I am therefore convinced that the SNB’s decision came at the right time. Without this difficult step, we would have compromised our ability to fulfil our mandate of ensuring price stability in the medium and long term. It is precisely by fulfilling this mandate that the SNB contributes indirectly to Swiss competitiveness in the long term. In my remarks today, I will first go into more detail about this contribution. I will then discuss the difference between the short and long-term effects of a strong currency on competitiveness. Finally, I will examine the role of the Swiss franc exchange rate in our monetary policy deliberations.