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2023 | Buch

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Switzerland and its Banks

A Short History

verfasst von: Nils Herger

Verlag: Springer International Publishing

Buchreihe : Frontiers in Economic History

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book provides a history of Swiss banking not confined to stereotypical opinions about secret numbered accounts. Instead, the presented history covers other intriguing events and developments beyond the famous issue of banking secrecy and the corresponding scandals.
Topics covered in the book include the early financial innovations by banks in Geneva to handle the sovereign risk on bonds issued in pre-revolutionary France, the monetary chaos that led to the creation of the Swiss franc, the rather peculiar banknote competition and free-banking system in Switzerland during most of the nineteenth century, how the country and its currency became a financial safe haven after World War I, the golden age of Swiss banking when Zurich was briefly one of the largest financial centres in the world, and the exceptional shocks during and after the recent global financial crisis. In sum, a fascinating story emerges about an internationally important banking centre in one of the most unlikely places in the world.
This book is a must-read for students, scholars, and researchers of economics and finance, as well as practitioners interested in a better understanding of economic history in general, and Swiss banking in particular.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction and Overview

Abstract

As an introduction, this chapter provides a broad overview of the development of Switzerland’s banks. In particular, this introduction reviews the development of their aggregate balance sheet since 1800, the number of employees in Swiss banking, and the amount of bank credit and mortgages in Switzerland since the nineteenth century.

Nils Herger

Chapter 2. Historical Background

Abstract

The general historical background of Switzerland has obviously had a major influence on the local banking system. This chapter provides a synoptic overview of Switzerland’s history by focusing on elements that are important to understand the development of the Swiss banking sector. In particular, this history can be subdivided into two major periods. The years before 1848 cover the so-called Old Confederation, when Switzerland was not a state in the modern sense, but merely represented a loose club of cantons (i.e., Swiss provinces) without a permanent federal government, a standing army, an internal market, or a common currency. The current political regime was adopted only with the Federal Constitution of 1848.

Nils Herger

Chapter 3. Banks in the Old Confederation and in Geneva (Before 1848)

Abstract

Switzerland was not a financially advanced country in Europe during the preindustrial age. Concurrently, the banking sector did not play an outstanding role during the period of the Old Confederation, i.e., the years before 1848. However, this did not imply that banking activities were completely absent in Switzerland before industrialisation. Above all, the private banks in Geneva were heavily involved in funding French government debt before the Revolution of 1789.

Nils Herger

Chapter 4. Free Banking and the Foundation of the Swiss National Bank (1826–1907)

Abstract

This chapter deals with the historically rather peculiar free-banking period of Switzerland, which was characterised by the absence of regulations on issuing money in the form of banknotes. Concretely, this implied that a large number of commercial banks were active in the market for paper money by issuing their own forms of banknotes in a more or less competitive manner. The free-banking period ended in 1907 with the relatively late introduction of a government banknote monopoly and the associated foundation of the Swiss National Bank (SNB) in 1907.

Nils Herger

Chapter 5. Railway Boom, the Big Banks, and the Ascent of Zurich as Financial Centre (1848–1914)

Abstract

Industrialisation gave rise to far-reaching economic and social upheavals during the nineteenth century. For the banking sector, the new world of mass production required vast amounts of capital to build and maintain industrial mega projects, especially the railway network. Around the world, the resulting financial challenges paved the way for the establishment of large stock-traded financial firms that appeared under different names in different countries, including “crédit mobilier” in France and “investment banks” in the United States. In Switzerland, they are called “big banks”, and early examples that appeared after the mid-nineteenth century were the nuclei of multinational financial firms, such as UBS. Furthermore, Switzerland’s railway boom during this period was closely intertwined with the emergence of Zurich as a leading banking centre.

Nils Herger

Chapter 6. A Safe Haven in an Unstable World (1914–1945)

Abstract

The highly unstable period between 1914 and 1939 was a turning point for Swiss banking. Ironically, the global ascent of Swiss banking began in earnest amid these years characterised by wars, political instability, financial disintegration, and economic depressions. The reason was that Switzerland remained relatively stable and tranquil. The big banks benefited from this stability by attracting offshore capital in search of a safe haven. However, the Great Depression of the 1930s and the contemporaneous destruction of the established monetary order through the rise of aggressive forms of nationalism and socialism were severe setbacks for Switzerland’s journey towards becoming an important offshore financial centre. Another noticeable legacy of this period of pervasive instability was the codification of banking secrecy in 1934.

Nils Herger

Chapter 7. The Golden Age (1946–1970s)

Abstract

The decades after the end of World War II in 1945 represent the golden age of Swiss banking. In particular, the global expansion of the big banks, especially their divisions dealing with international wealth management, transformed Zurich into one of the largest offshore banking centres in the world. This chapter reviews this golden age and, in particular, assesses the importance of banking secrecy, currency convertibility, and other factors in explaining the extraordinary international expansion of Switzerland’s banks.

Nils Herger

Chapter 8. Swiss Banking During Financial Globalisation (1970s–2008)

Abstract

The collapse of the Bretton Woods System during the early 1970s paved the way for an era of globalised cross-border trade and payments. This globalisation was associated with profound restructuring, consolidations, and regulatory changes. In addition, for Switzerland’s banks, the integrity of their international business was undermined by a series of scandals, which revealed the urgent need for tighter regulations to combat money laundering and tax evasion. Moreover, a wave of mergers and acquisitions during the 1990s occurred among the big banks reducing their number from five to two, that is, Credit Suisse and UBS. Switzerland managed to retain its position as a leading offshore centre for wealth management and head-office location for several multinational banks during this era characterised by a financial globalisation.

Nils Herger

Chapter 9. Global Financial Crisis, Too-Big-to-Fail Problem, and the End of Banking Secrecy (Since 2008)

Abstract

The Global Financial Crisis of 2008 created a degree of economic instability not seen since the 1930s. In addition, for Switzerland, the years after 2008 created the idiosyncratic challenge of how to deal with two banks that are too big to fail. Furthermore, many countries around the world witnessed a massive increase in public debt. An aggressive clampdown on tax evasion became an obvious political answer to the resulting fiscal problems. Given the status as a large offshore banking centre, Switzerland became a target for international criticism of facilitating tax evasion. This resulted in the dismantling of banking secrecy for foreign customers during the decade after 2010. In general, this decade was characterised by a declining importance of the banking sector in Switzerland.

Nils Herger

Chapter 10. Why Are There So Many Banks in Switzerland? A Tentative Answer

Abstract

As a summary and conclusion, this chapter endeavours to provide a tentative answer to the question: why are there so many banks in Switzerland?

Nils Herger

Backmatter

Titel: Switzerland and its Banks
verfasst von: Nils Herger
Verlag: Springer International Publishing
Electronic ISBN: 978-3-031-35904-0
Print ISBN: 978-3-031-35903-3
DOI: https://doi.org/10.1007/978-3-031-35904-0

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Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction and Overview

Chapter 2. Historical Background

Chapter 3. Banks in the Old Confederation and in Geneva (Before 1848)

Chapter 4. Free Banking and the Foundation of the Swiss National Bank (1826–1907)

Chapter 5. Railway Boom, the Big Banks, and the Ascent of Zurich as Financial Centre (1848–1914)

Chapter 6. A Safe Haven in an Unstable World (1914–1945)

Chapter 7. The Golden Age (1946–1970s)

Chapter 8. Swiss Banking During Financial Globalisation (1970s–2008)

Chapter 9. Global Financial Crisis, Too-Big-to-Fail Problem, and the End of Banking Secrecy (Since 2008)

Chapter 10. Why Are There So Many Banks in Switzerland? A Tentative Answer

Backmatter

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