The History of the Swiss Bank- The World's Safest Place FOR yOUR sAVING?

The History of the Swiss Bank- The World's Safest Place FOR yOUR sAVING?

What is a Swiss bank?

First off, it is inaccurate to ask, "What is a Swiss bank?" Instead, the question should be, "What are Swiss banks?" Because any bank that works in accordance with Swiss banking legislation and is a Swiss national bank inside the borders of Switzerland (some Swiss banks also have offices beyond Switzerland), is referred to as a Swiss bank.

The History of the Swiss Bank

Traditionally, the Swiss Bank has been viewed as the world’s most secure place to store cash and valuables due to its unique geographical situation in the heart of Europe. Surrounded on three sides by France, Germany, and Italy, and on the fourth side by Austria and the Swiss Alps, Switzerland has historically been a peaceful and neutral country. This favorable geopolitical location and stable governance has ensured the Swiss Bank’s long and profitable history. However, the Swiss Bank has a long and colorful history, dating back to the Middle Ages, when it first started to gain recognition.

UBS and Credit Suisse are the two biggest banks in Switzerland, accounting for more than half of all deposits.

 

 In 1998, UBS came into operation after the merger between Union Bank of Switzerland and Swiss bank corporation. The bank is headquartered in Zurich.

Origins in Basel and Zurich

The first Swiss Bank was set up in 1460 in Basel as the "Kredit-Genossenschaft". What started out as an association of local goldsmiths and merchants to enable the lending of money to their customers, soon grew into a commercial bank, issuing letters of credit and, later, money orders. The first Zurich bank, the "Wolff & Hutt Gasser Bank", was established in the 17th century, building on the city’s long-standing reputation as a trading center. The Swiss Bank’s developmental hiatus between 1900 and 1945 was due to the two world wars. However, the Swiss Bank reemerged as a powerful financial institution after the Second World War and continued its upward trajectory, enjoying unrivaled notoriety and global recognition.

Modern Banking in Switzerland

Although the Swiss Bank is the largest in the world, its customer base is comparatively small, with just 8 million people in a population of 8 million holding accounts with Swiss Banks. This is because Swiss Banks have a very high set of entry criteria, including a minimum deposit of $50,000, a clean credit rating, and a minimum age of 20 years old. However, despite such rigorous entry criteria, many of the world’s most wealthy individuals, celebrities, and business leaders hold their savings in Swiss Banks, attracted by the country’s reputation for security and privacy. The Swiss Bank has reaped the rewards of this, enjoying the highest average interest rate in the world, at roughly 2% per annum.

 Why is swiss bank considered the safest?

One of the main reasons people choose to store their money in Swiss Banks is the strict bank secrecy laws. As per the federal Act on Banks and saving banks commonly known as the Swiss banking Act or Banking law of 1934 which was passed on February 2, 1934, by the Federal Assembly of the swiss confederation, it is a criminal offense to disclose the account holders information. So, Switzerland is considered the “grandfather of banking secrecy”. It is almost impossible to know about account holders' details unless the account holder submits a written statement of consent or a financial crime has been directly linked to the bank account. Those who disclose client information are subject to a maximum of 5 years in imprisonment and 250,000 swiss francs in fines. But after Switzerland signed the AOEI(Automatic exchange of information) agreement, Switzerland has to share its foreign bank account holders' information with their respective government bodies from 2018 for tax purposes. So, we can say that secrecy in Swiss banks is not the same as it used to be.

Other Features of Swiss Banks

The Swiss Bank is unique in the banking industry for several reasons: Firstly, the Swiss Bank has long been recognized as holding a large portion of its clients’ assets in gold, a fact that has attracted many customers in recent years as gold has regained its popularity as a safe haven investment. Secondly, the Swiss Bank also has its own currency, known as the Swiss Franc, which is considered one of the most stable currencies in the world. In fact, it is the only currency to have retained its value throughout Swiss history. Lastly, the Swiss Bank is also known for its strict management of the funds of its clients, with the bank approving every transaction, and has been known to freeze withdrawals from time to time, even when the account holder has legitimate access to the funds.

 

The Catch – Protecting our anonymity

One of the most attractive features of the Swiss Bank is the anonymity it offers its clients. For this reason, the Swiss Bank has become very popular with criminals, who prefer to use it to launder their money in order to avoid detection by law enforcement agencies. However, Swiss Banks are required to report transactions of $10,000 or more, as well as any suspicious activity, in order to prevent money laundering, and they must cooperate with foreign governments if their assistance is requested. However, it is worth bearing in mind that if we are looking to open an account with a Swiss Bank, we will have to reveal our identity, but the money we deposit will be under our own name. So, it is not anonymous after all.

 

 Why do Swiss banks accept black money?

 

Swiss banks do not accept black money. Mainly, Black money is first converted into white by the hawala method, by opening an offshore company in tax havens, or by other money laundering methods, and then they have kept it in swiss banks to keep the wealth secret.

 

Final Words: Should we trust the Swiss Bank?

The Swiss Bank is a trusted and established financial institution that has been providing financial services for centuries, and its reputation is unblemished. However, it is also an expensive institution, with its funds being held in gold, and all transactions being monitored, meaning services are slower than those provided by more modern institutions. Furthermore, the Swiss Bank relies on its reputation for privacy, and this can only be sustained if strict regulations are enforced, leading to the occasional freeze on withdrawals. However, the Swiss Bank has a long and reputable history, and is the world’s largest and safest bank. So, when it comes to trusting the Swiss Bank with our assets, we can rest assured that they will be in the safest and most secure place possible.

  • "Created at : 2022-07-28 , Author name : Shreya Adhikari"


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    The History of the Swiss Bank- The World's Safest Place FOR yOUR sAVING?