Swiss Concerned About Their Place in the Banking World

Pressure to amend secrecy laws weighs on Switzerland

The Swiss are concerned right now that some sort of government intervention may be needed to help prop up the faltering Swiss economy. Switzerland relies heavily on its banking sector, and the deterioration in credit assets has been troubling. However, there are other issues that the Swiss have to contend with when it comes to banking. GFT’s Boris Schlossberg explains the Swiss problem in FX360:

The Swiss economic situation is unique because the country’s key banking sector has been under assault from both the deterioration of credit assets as well as pressure from other G-10 members to amend it bank secrecy laws in order to curtail tax avoidance in Europe and US. By succumbing to this pressure, the Swiss no doubt are losing their competitive advantage to other money center locations such as Singapore.

The U.S. has been especially interested in cracking down on tax havens in Switzerland. Already some banks have complied, turning over client lists. The idea that Swiss secret banking may no longer be very secret has many looking elsewhere. With Swiss banks so wounded, Switzerland is going to have serious problems rebounding.

And that means that forex traders who like the Swiss franc in currency trading are going to be rather disappointed.