Switzerland: Global Financial Center
Switzerland is world-renowned as a leading international financial center. Its long history as a major banking hub with a stable political system and great openness to trade continue to attract investors from around the world.
While the famed “Swiss bank account” continues to capture the public imagination, hiding one’s millions in secret accounts in the small alpine republic is a thing of the past.
Switzerland is the “world’s largest offshore wealth center,” with an estimated $2.2 trillion in assets (more than 3 times its GDP of $632.2 billion). Since it signed a deal with the OECD in 2014 to help fight tax evasion, foreign tax authorities can ask Switzerland’s banks to release information about their clients. Switzerland agreed to exchange data with 60 other countries, including the G-20 states, thereby essentially ending its historic banking secrecy.
Clients from all over the world continue to entrust their money to Swiss banks, not for purposes of mystical secrecy, but for unrivaled know-how and reliability: Switzerland has a long history of political and financial stability, a strong tradition of fiscal discipline, and centuries of banking expertise.
Switzerland has one of the most stable, modern, and highly developed market economies in the world. It also has a long history of dedication to free trade and open markets. The country has a long-standing tradition of neutrality in foreign policy, and has been a constitutional democracy since 1848. The Swiss franc is one of the world’s most stable currencies, with the Swiss National Bank successfully controlling inflation since World War II. Since the mid-1990s, consistent monetary policy and historically high savings rates have contributed to a growing capital pool.
Components of Switzerland’s financial system:
Swiss National Bank: Conducts Switzerland’s monetary policy as an independent central bank. It is obliged by the Swiss constitution and by statute to act in accordance with the interests of the country as a whole. The bank focuses primarily on maintaining price stability and fostering an environment conducive to economic growth.
Financial Market Supervisory Authority (FINMA): Established in 2009 as successor to the Swiss Federal Banking Authority (SFBC), the Federal office of Private Insurance (FOPI) and the Anti-Money Laundering Control Authority (AMLCO) to strengthen financial-market supervision in Switzerland. FINMA is the main regulator of the financial services industry in Switzerland, tasked with protecting investors, creditors, and policyholders and ensuring that the Swiss financial market functions properly. In accordance with its statutory mandate, FINMA publishes financial information, issues public warnings, and considers complaints about financial-services providers.
SIX Swiss Exchange: Operates Switzerland’s financial market infrastructure. SIX offers comprehensive services for securities trading, clearing, and settlement, as well as financial information and payment transactions on a global scale. The company is owned by its users—about 130 banks of various sizes.
Financial Center Zurich: One of the five most competitive financial centers in the world, Zurich’s financial center is by far the most important branch of industry in the Zurich region. The Zurich financial center plays a central role as an employer, a provider of vocational training, and a promoter of cultural institutions and events. In the Zurich region, one in every five Swiss francs of value added is generated, and one in ten jobs provided, by the financial industry.
Geneva Financial Center (GFC): Created in 1991 by the 80 banks that were then members of the Geneva stock exchange. The GFC is the umbrella association of Geneva’s financial sector. It promotes the regional banking interests of the Geneva region.
Swiss Bankers Association: Aims to achieve the best possible operating conditions for banks in Switzerland. It is the largest banking association in Switzerland.
Association of Foreign Banks in Switzerland: Founded in 1972 by Swiss banks with a majority of shareholders living abroad and Swiss branches of foreign banks. It is the second-largest banking association in Switzerland.
Association of Swiss Private Banks: Currently consists of nine member banks with about 7,500 employees around the world. The association’s primary mission is to represent the business interests of privately owned Swiss banks that specialize in wealth management.
Swiss Insurance Association: An umbrella organization that represents the private insurance industry. Its members are around 80 national and international, small and large insurers and reinsurers, employing more than 50,000 people in Switzerland.
Swiss Funds & Asset Management Association: Represents the Swiss fund and asset management industry. Its members include all major Swiss fund management companies, many asset managers, and representatives of foreign collective investment plans.
Reading and resources:
A guide to banking in Switzerland
Financial system as driver of green economy
Secrecy ending for Swiss bank accounts
Living and investing in Switzerland (essay)
Swiss Banks Providing Services to U.S. Person Clients