Switzerland ran out of watches and chocolates, ran out of cash

When one hears about her Switzerland, his mind no doubt goes to delectable chocolates, precision watches, but also to a place where rich people from all over the earth have trusted their money for centuries. Stability, geopolitical neutrality, a lasting prosperity, but above all the notorious (or infamous according to some regulators) banking secrecy had made the country one of the most powerful financial centers on the planet.

As Mark Gilbert writes in Bloomberg, “when Asterix the Gaul visited the Swiss he met a Swiss banker who embodied the nation’s inviolable privacy laws, iron stability and geopolitical neutrality.” If Asterix met Zurich today, things would be very different.

Indeed for most of the 20th century, the rich and powerful trusted their wealth to Swiss banks. But the collapse of Lehman Brothers changed everything. Terrorism was also a determining factor, as it exerted pressure to lift secrecy. It was not possible for banks to accept money whose source they did not know, facilitating the financing of terrorist organizations and money laundering.

Somehow more than 50 Swiss banking brands disappeared between 2008 and 2017. The financial sector’s contribution to the country’s gross domestic product shrank to less than 10%.

Now Switzerland’s profile as a financial center has been dealt another blow with UBS’s hasty takeover of Credit Suisse, which is backed by lavish government guarantees. The golden ages are over.