Banking has a long tradition in Switzerland dating as far back as the end of the Renaissance. Thanks to its geographical location in the heart of Europe as well as its economic and political stability, Switzerland has succeeded over the centuries in making a name for itself as an international financial centre, which is prized for its outstanding expertise and discretion.

During the 17th century, Swiss traders gradually began to specialise in the overseas investment of huge private and public capital, which had been raised through foreign military service, early industry and trade. Before long, they had built up excellent business connections in all of Europe’s major cities and had developed a robust network of international monetary transactions, which would later form the cornerstone of the Swiss banking system. Among their most loyal clients were the kings of France whose financial needs were virtually insatiable. From the outset, this working relationship depended on total discretion, since it could never become public knowledge that the French Catholic royalty borrowed money from Protestant “heretics”. This code of conduct, which protected privacy in financial matters, would later be referred to as banking secrecy or, to put it more accurately, bank client confidentiality.

In the wake of the political upheaval that took hold of 18th century Europe, Switzerland, and particularly Geneva, became a financial refuge for those seeking to escape the consequences of the revolution; it is even said that Napoleon I was a client of one of Switzerland’s banks. Having attracted so much capital, it did not take long before Swiss banks became major players in the international financial market. They would also help considerably to fund the industrial revolution. The 19th century also saw the emergence of the first commercial and industrial banks.

The turn of the 20th century heralded a new era of prosperity. As a result of tax hikes across Europe, capital began to flood into Swiss banks, as European citizens attempted to outwit the voracious taxman. Their legendary discretion would put Swiss bankers at a considerable advantage over international competitors.

As a result of the global economic crisis in 1929, Switzerland came under growing pressure from many European countries, anxious to curb tax evasion. Far from seeing its influence undermined, the Swiss financial centre was able to consolidate its position thanks, in part, to the decision of the Swiss parliament in 1934 to codify banking secrecy.

The two world wars allowed the Swiss financial centre to assert once and for all its standing as a leader in asset management. Since it did not take part in the fighting, Switzerland managed to emerge from the war years with one of the strongest currencies in the world, a lenient tax system and political institutions renowned for their stability. These factors, coupled with its respect for privacy in financial matters, earned Switzerland the reputation as a safe haven for international capital. During the entire second half of the 20th century, the Swiss financial centre enjoyed a period of sustained growth.

The success of the financial services industry has always depended on a favourable environment. Enduring political and macroeconomic stability, as well as a longstanding rule of law were major plus points for the Swiss financial centre. Having said that, the success of the Swiss banks is also due to more elemental factors, such as the liberal stance of most Swiss people on economic and social issues, their uncompromising respect for private property and their special attitude to money, which is characterised by modesty and discretion.