Swiss banks - History

Swiss bank secrecy protects the privacy of the account holders; the protections afforded under Swiss law are similar to confidentiality protections between lawyers and their clients or doctors and patients.

History

Contrary to popular belief, Swiss banking does not utilize frisking customers upon entrance nor is it exclusively for the rich, secret agents and criminals. In fact, the Swiss Bank is for anyone. The Bank itself functions as an independent central banking system for Switzerland that works to grow the country's finances without damaging to the economy. The Bank functions under a three-step monetary policy:

  1. State price stability -- allows economic growth (for comparison, inflation/deflation hurts economies)
  2. Base policy on a medium-term inflation prediction
  3. Set operations target at chosen interest rate
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Still Young

The history of the Swiss Bank is fairly young -- 110 years, in fact. Founded by the Federal Act of January 1906, the Swiss National Bank was put into operation a year and a half later in June of 1907. The Bank is a joint-stock company model supervised by special provisions of Swiss federal law and regulated by the Confederation and the National Bank Act. The National Bank Act (NBA) was issued in October 2003 and specifically details the independence of the Swiss Bank as well as issuing the rules and fine print of how the Bank's profits are to be determined and distributed. The Swiss Bank is allowed the privilege to make banknotes and coins and through a creation/destruction circulation, the Bank regulates the economy and avoids inflation and deflation trends. The Bank also collects statistics on banks and financial markets, the balance of payments, direct investments, Swiss financial accounts as well as the international investment, to name a few data collections.

The Swiss National Bank functions on both the public and private spheres. All of the Swiss National Bank's shares are registered and listed in the stock exchange for public access, in which 55% of shareholders are not private parties, to whom about 25 million CHF belong too. The Confederation does not hold any shares. The Bank also lists all assets, liabilities, and equity directly on its website, under statements and profit.

In its private sphere, the Swiss Bank is only "secret" in regards to its position on client confidentiality. The National Bank Ordinance (NBO) of March 2004 helps detail security on data collection and the rights and obligations of the Bank's clients. The Bank functions much like a doctor/patient relationship -- the Bank is not allowed to disclose any information about its client (including if an account even exists) without the client's permission. If this is breached, the banker can face up to six months in prison and multiple fines for damages.

The public/private balance that the Bank keeps also extends to its branches. A public branch, or retail branch, is open to anyone who wishes to open and use a bank account. The private Swiss banks, however, are only available for those clients who keep over 1 million in an account. The difference of branch treatments does not impede the level of security a client receives, it simply determines the level of pampering and attention received upon entering the location.

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