One reason why the Swiss are drumming so much against the Germans these days may have to do with the disagreement on foreign bank accounts.
On February 1st a CD surfaced that apparently contains the account numbers and names as well as the deposits in these accounts that foreign account holders have deposited. To prove the authenticity of the information, the German equivalent of the IRS was given about 100 samples in which the back taxes amounted quickly into the billions. Not a bad extra payday when you are a country that can use a little extra cash. Here’s the crux. In Germany this caused a big debate whether the federal government should do business with people who can provide such information, especially when there is suspicion that the information may have been received illegally. In Switzerland, this caused a huge outrage, because the Germans demanded just like a few other countries, too, that Switzerland simply share the information on foreign account holders and their deposits in these accounts. What the Germans in essence want is for Switzerland to significantly water down its bank secrecy vow.
The Swiss banks and a lot of the conservative parties realized immediately that softening bank account confidentiality would be giving up the primary differentiating feature the country has over most any other nations in the world. The fear was and still is, that the account owners would pull their assets from the Swiss institutions and Switzerland would have nothing to administer.
The question that would be interesting to have an answer for is what percentage of all deposits are ill-gotten and what percentage have ben earned honestly. There are rumors circulating that from weapons traffickers to, African despots and drug lords everyone is using Swiss numbered accounts to hide black money and to launder it from there. Obviously, I myself have no idea, whether any of that is true or not. But I can see the attraction of a numbered account.
Since February 1st the discussion and the tone have changed.The German parties that showed so much outrage and indignation are all of a sudden showing very cold feet. The working assumption is that the data was stolen and the German government doe snot engage in business with criminals – although there is no confirmation where, through who and how the information was acquired. But the party that primarily gets its votes from the “wealthy” in Germany and that has been the king-maker in German government for years is objecting vehemently against buying and using the information, very much to the dismay and frustration of the ordinary tax payer in Germany.
In Switzerland on the other hand, the parties that have been outraged by the notion to soften the Swiss number account confidentiality are also changing their tune, due to pressure from most European neighbors and America. Although Switzerland got a short reprieve in this discussion through the Ghaddafi incident, the topic is hotly debated in Switzerland. All but one party along with some private banks have determined, that Switzerland needs a so-called “White Money Strategy”. Where deposits beyond a certain size and the income on these deposits are reported to the country the account owner resides in, in order to collect taxes.
However, the most right-wing party the Swiss Peoples Party is vehemently rejecting this notion. Why this party is flat-out rejecting any discussion on how to accommodate the interest of international Swiss bank clients and tax interests of the countries these clients reside in, is beyond me. The whole point of Swiss banks was that there wasn’t any fuss, they weren’t in the headlines and that’s exactly what the banks are experiencing presently. However, there also weren’t any confidentiality leaks at least none that ever made headlines.
From my point of view, the more Switzerland is clinging to its glorious banking past, the more the country is losing credibility. The banks haven’t been able to maintain the confidentiality, the world is more or less one big market place where information can travel from one continent to another in seconds, there is only one real option left – full disclosure. Switzerland may be able to negotiate leniency for the tax evaders in exchange for full disclosure, but I don’t think there is a way around that. Customer confidence has been shaken, especially those who had or still have assets to hide in Switzerland. We’ll see how this is going to play out over the next few months. Although there is always the possibility, that it will all be blown over by the next even bigger headline.
Yours Markus \m/