Switzerland: a history of the world's most famous financial center
Switzerland is recognized as one of the world's most important and renown major financial centers. Almost a quarter of the world's foreign assets are managed in Switzerland, which means there are a large number of independent banks, insurance companies and asset managers in the country.
The first financial activities originally arose from loans to support commercial activities for companies, or for large structural works such as railways and major communication routes. In the Middle Ages, Switzerland assumed a certain importance as a trading platform thanks to its strategic geographical position in the center of Europe, which allowed it to control the most important Alpine passes, which were the only passages of goods from south to north, especially from Italy and the nearby Mediterranean. The boom in trade fairs in Geneva - an important European trading center in the 15th century - attracted numerous foreign financiers and investors, thanks to which the foundations of the Swiss financial industry were laid.
In the 16th and 17th centuries, the sectarian rift in Europe prompted many Protestants to take refuge in the Swiss Reformed cantons. This event contributed not only to the birth of the watch industry in the west of Switzerland, but also to the growth of foreign population who saw Switzerland as a refuge to protect their religious beliefs, bringing them wealth and well-being, and consequently the need to manage their important financial assets.
From the 19th century onward as the companies in Geneva, Basel and, later, the textile companies of St. Gallen grew, so did the need for financial experts to deal with credits, exchanges and the first derivative products to offset the risks. The neutrality of Switzerland, recognized by the Congress of Vienna in 1815, and the creation of the modern federal state after the Swiss Sonderbund War of 1847, laid the foundations for a strong wealth management sector.
The 20th Century - The Transformation
Switzerland developed into a real international financial center, especially during the economic and political turmoil of the 20th century. Two world wars, a cold war, several financial crises, and the instability of many currencies meant that the Confederation became a magnet for all the world's capitals. Huge fortunes, gold, works of art, and other precious assets were transferred to Switzerland as a refuge to protect and preserve theses assets, above all thanks to its neutral position cemented during the two World Wars.
This is how the skills and experiences of Swiss bankers and fiduciaries were born and grew out of necessity and quickly grew, to protect large assets that are not able to manage and protect large assets, not only financial, bur often very diversified and complex.
The Banking Secret
One of the key factors in Switzerland's success, the most disputed myth at international level, was undoubtedly its banking secrecy, established by law with the 1934 "Banking Act" which made disclosure of information about the account holder a crime punishable by law in Switzerland. But the "banking secrecy code", as far as account holders are concerned, had existed for over 300 years. It was the kings of France, with their impressive financial needs, including loans, who required absolute secrecy on bank accounts. Swiss banking secrecy dates back to this historical period, when in 1713 the Grand Council of Geneva imposed an obligation on bankers to keep a registry of all their customers but prohibited their disclosure.
More recently, the first decade of the new Millennium sees Switzerland at the center of international pressure for the elimination of banking secrecy. In particular, the FATCA agreement (Foreign Account Tax Compliance Act) came into force in the United States in 2014, by which the United States requires all data on capital held in the world by persons subject to US taxation. Finally, in May 2016, the Swiss Parliament gave the green light to a new agreement on the taxation of savings between Switzerland and the EU, which introduces the automatic exchange of tax information based on international standards developed by the OECD.
Swiss banking secrecy officially lapses on January 1, 2017 for all except residents of Switzerland. In fact, 2017 marks the entry into force of the new agreement on taxation of savings between Switzerland and the European Union. However, the automatic electronic exchange of information will only start on January 1, 2018. A step forward in international collaboration and the fight against money laundering.
Nevertheless, after a couple of years of adjustment and internal reorganization of the sector, Switzerland has maintained and still maintains the interest of clients in the management of large assets, appreciating the strengths of the Confederation and the skills of the Swiss managers, the Swiss franc as a strong currency, the reliability and solidity of a liberal country that places the protection of the person and his privacy as a fundamental and essential principle.