Sea-change for financial market policy

The financial crisis and its aftermath have shaken the international financial system to its very foundations. The huge losses incurred by many leading financial institutions have triggered upheaval and changed market structures. The competition between financial centres has increased noticeably.

The financial sector is a supporting pillar of the Swiss economy. Its contribution to gross domestic product (GDP) is approximately 10%. The Federal Council paved the way for the future financial market policy in December 2009 in its report entitled "Strategic directions for Switzerland's financial market policy".

Strategic directions of financial market policy

The Federal Council made clear in its strategy report that it wants a competitive, secure and internationally accepted financial centre that generates prosperity and pays taxes. In order to achieve these objectives, four challenges essentially have to be tackled:

White money strategy

The pressure on bank client confidentiality and the tax system are putting a strain on the future of Switzerland's financial centre. The management of untaxed assets was seen as a competitive advantage for a long time, but those days are now over. The understanding has won out that untaxed assets are in the interest of neither Switzerland nor the banks over the longer term. The new financial market policy is consistently geared towards the management of taxed assets.

The future investment income and capital gains of foreign bank clients in Switzerland should be subject to a final withholding tax. Combined with efficient administrative assistance upon request, the final withholding tax reconciles the protection of privacy with the tax claims of governments. The first agreements that provide for a final withholding tax were signed with Germany and the United Kingdom in autumn 2011.

Improved market access

Given the growing protectionist trend, efforts should be stepped up to secure and enhance long-term market access for Swiss financial intermediaries. Corresponding improvements were achieved in the new tax agreements with Germany and the United Kingdom.

Reduction of the risks posed by systemically important financial institutions

With two of the world's leading big banks, systemic risks are especially pronounced in Switzerland. The Federal Council adopted a dispatch on dealing with systemically important financial institutions in April 2011 in order to reduce these risks. The package of measures is designed to prevent the difficulties of a big bank from endangering the entire national economy and also prevent the government from having to bail out such a bank with tax money ("too big to fail" bill). Systemically important banks should build up more capital and meet more stringent liquidity requirements by 2018. Better risk management and organisational precautions for an emergency should ensure that the national economy's systemically important functions can be maintained even in the event of threatened insolvency. The bill is expected to enter into force in 2012.

Active contribution to international financial system reforms

As a major financial centre, Switzerland benefits from stable international financial markets. It thus wishes to do all it can to influence the reforms in a bid to increase the financial stability of the international financial system. It does so primarily in the International Monetary Fund (IMF) and the Financial Stability Board (FSB).

Implementation of the strategic directions

The "Financial Market Policy" interdepartmental working group is responsible for implementing the strategic directions. Moreover, the State Secretariat for International Financial Matters (SIF), which was created in March 2010 to combine the expertise in this area, is an important component of the new strategy.