Switzerland Pays Price for Isolationism

Switzerland has long been known as “a custodian of the world’s wealth,” but the recent credit crunch has hit all banks hard and Swiss policies of isolation have not made the nation immune against effects of the economic downturn. The Swiss franc is losing value to the dollar, and the Swiss economy is expected to contract. Swiss bank UBS faced the biggest losses in Europe and had to be aided with $59 billion from the government. Other banks, such as Credit Suisse, have had to seek aid from investors which “added to concerns that control of the country’s banks is moving out of Swiss hands.” According to the authors, “the greatest menace may be a series of investigations in the United States that puts the Swiss tradition of banking secrecy at risk.” Switzerland stands at a crossroads, with some turning to protectionism and others seeing an opportunity for membership in the European Union. The direction Switzerland chooses could have implications for the global banking industry. – YaleGlobal