The genesis of Swiss banking secrecy: political and economic environment

Until 1935 there was no national legislation governing banking in Switzerland and hence no banking secrecy codified at national level. Over the centuries a distinctive relationship of trust had arisen between the Swiss banks and their customers which made banking secrecy an unwritten law. Even before the First World War a number of banks had failed in Switzerland and the first specific calls for government supervision of the banks were made, unsuccessfully, as early as 1916. In the early 1930s major Swiss banks had been severely affected by the 1931 German banking crisis. There was also during the 1930s a great fear of civil disruption, a breakdown of order and of espionage and infringements of sovereignty in the context of an increasingly threatening international situation. Banks throughout Europe were spied upon to prevent the evasion of the war taxes that had been introduced in many countries. Swiss banks had been the target of French and German investigations since 1931. The debacle over Volksbank in 1933 was in some ways the catalyst that finally accelerated a political settlement over banking legislation.