7. The Golden Age (1946–1970s)

Of note, the dormant accounts that became a notorious legacy of World War II during the second part of the twentieth century were no more than a side issue during the Washington negotiations. In particular, the Allies merely asked the Swiss delegation to look into the matter and, if the rightful owner of a dormant account was no longer alive, to transfer the corresponding money as financial aid to the governments of France, Great Britain, and the United States (Perrenoud et al., 2002, pp.239–241). Moreover, a bilateral agreement dealing with the legacy of dormant accounts was, e.g., concluded with Poland in 1949 (Perrenoud et al., 2002, pp.244ff.).

This growth rate has been calculated from the data of the “Historical Statistics of Switzerland” (www.​hsso.​ch).

Simultaneously, the golden age saw also a marked increase of foreign bank branches in Switzerland (Cassis, 2010, pp.234–235).

Conversely, the capital controls in most of the other countries were supposed to stem the outflow of capital.

Similar situations of how to deal with the domestic side effects of large capital inflows did, of course, occasionally reappear within the Swiss financial system during the following decades (see, e.g., Sect. 9.​1).

These sometimes quite entertaining books include Fehrenbach’s (1966) “Gnomes of Zurich”, whose title borrows the words used by British prime minister Harold Wilson to blame the instability of sterling during the 1960s on currency speculators in Zurich. Faith’s (1982) “Safety in Numbers” obviously alludes to the role of numbered accounts. One of the sternest critics is Ziegler (1982, pp.48ff.), who accuses Switzerland’s banks of nothing less than profiteering from hunger, war, and colonialism by attracting capital from economically underdeveloped countries. These accusations are quite polemical. Capital flight is indeed a problem for the developing world. However, it is unclear how foreign banks can be directly responsible for reluctance to invest in these countries, which typically results from their political instability, the absence of the rule of law, high inflation, or widespread corruption (Vogler, 2006, pp.57–58; 83). Capital flows from low-income countries to banks in high-income countries are merely a symptom of a relatively unattractive economic and political environment. Imposing restrictions to interrupt these transactions would obviously not cure the underlying problems.

For a more comprehensive overview of banking-secrecy rules around the world, see Vogler (2006, pp.52–55).

These claims have even entered the academic literature; see, e.g., Cassis (2010, p.276).

It should be noted that the declaration of bank accounts is incentivised in Switzerland by charging an anonymous withholding tax on their interest-rate income. When an account is reported to the tax authorities, this withholding tax can be deducted from a household’s or a firm’s tax liabilities. In general, despite banking secrecy, tax evasion and the shadow economy are quite limited in Switzerland compared with other countries (see e.g. Medina & Scheider, 2019).

Banks, by no means, represent the only vehicles of financial crimes (see, e.g., Emmenegger, 2014, pp.150ff.). For example, shell companies and trusts, which are popular in common-law countries, also lend themselves to illegal financial activities and tax evasion. In this regard, a recent international field experiment to set up anonymous companies, whereby the researchers disguised as businessmen indicated their intention to avoid paying taxes, led to the following finding: “Against the conventional policy wisdom, […] shell companies from tax havens were significantly more likely to comply with the rules than providers in OECD countries like the United States and Britain.” (Findley et al., 2017, p.3).