Obituary: Swiss Bank Secrecy (1934-2014)
May 9, 2014
A post from Stefan Leins (via Martha Poon) – thank you!
This Tuesday, representatives of the Swiss government confirmed their willingness to sign OECD’s new global standard on automatic exchange of information in tax matters.
Even though the Swiss Bank Secrecy has already begun to falter in 2009, when UBS was forced to hand out financial information of approximately 300 clients to the US government, this week’s development is a big step for Switzerland. On the one hand, the Swiss Bank Secrecy has become a significant competitive advantage to Swiss Banks, offering clients to store their money in Switzerland without exposing financial information to tax authorities. This helped Switzerland to become the world largest offshore financial center, managing 2.1 trillion US dollar of offshore wealth. On the other hand, the Swiss Bank Secrecy has become an identifying feature of Switzerland – just as much as chocolate, cheese and expensive watches. Due to this, many Swiss people hardly tolerate a critical stance toward this unofficial cultural heritage.
Historian Peter Habluezel once put it nicely saying that from a Swiss perspective, the narrative goes: “whoever questions our banks, questions our country, questions us”.
The cohesive power and mythical vibe of the Banking Secrecy evokes the classical attributes of an invented tradition. While the Financial Times talks about a “century long tradition”, one should note that the Swiss Banking Secrecy is no more than eighty years old. Introduced in 1934 as a reaction to the great depression, is has quickly become a tool to attract large amounts of wealth to Switzerland. Economic historians agree that, even though its original goal may not have been to evade taxes, the Swiss Bank Secrecy soon became an attractive tool to do so. And the criminal energy it stimulated was breathtaking: Recent reports of a banker smuggling undeclared diamonds in toothpaste tubes to Switzerland almost excelled the caricature of the Swiss money transporters in the movie The Wolf of Wall Street.
Interestingly, the Swiss Bank Secrecy has not become a victim of the political activity of Switzerland’s leftist parties that fought against it for decades. In 2009, the shady activities of UBS lead to a weakening of the Bank Secrecy. Now, five years later, it is assumed that Switzerland’s pledge to accept the OECD standard is a strategic attempt to release pressure from its other big bank Credit Suisse that is currently subject to severe accusations in the US. This time, a capitalist regime really produced its own gravediggers.
In ambivalent memory,