Switzerland strikes back
Belgium and Switzerland have almost the same size, and face similar financial and economic problems. The problems might be even more threatening for the Suisse. The big banks are faced with gigantic losses and on top of that mounting pressure on the offshore banking model.
Switzerland and its banks, which contribute about 10 percent to the economy and employ about 3 percent of the population, have often come under criticism for the secrecy laws. The United States and Germany have been among the laws' fiercest critics. But Switzerland has rejected claims that its client confidentiality rules, a key to the success of its financial industry, attract tax evaders.
Admitting to mistakes and inadequate control systems, UBS on Wednesday agreed to pay $780 million to settle a U.S. investigation into claims that some of its bankers actively helped U.S. clients to evade $300 million a year in American taxes by destroying records and using Swiss credit cards to purchase goods so their spending patterns could not be tracked. UBS closed the cross-border banking unit where the bankers worked.
The error UBS made a decade ago, is to buy US financial institutions. In 1999 it took over the private banking activitites of Bank of America for Europe and Asia. In 2000 it buys PaineWebber.
From that point onwards, UBS becomes vulnerable for the US threat to withdraw its banking licence, if it does not disclose information about US citizens in offshore banking...
But now the Suisse want to strike back.
As my friend Larry Jedeloh writes me this morning from the US:
Even before the banks began to mount a counter-offensive, the largest political party in Switzerland, the SVP, has announced it wants to punish the U.S. Some of their proposed remedies include reconsidering representing U.S. interests in countries where America has no diplomatic community, refusing to accept prisoners from Guantanamo and prohibiting the sale of U.S. funds in Switzerland. It was their fourth proposal which caught my eye. The SVP proposed repatriating the gold stored by the Swiss National Bank, from the U.S. I wonder if that gold has been leased out. Is it deliverable? If Switzerland’s bullion has been leased out, there could be quite a scramble should the SVP succeed in its efforts to protect Swiss banking secrecy from “further foreign blackmail.”
So now it is becoming interesting, and sorry for the expression, it becomes like chess, or economic war tactics.The Swiss want their gold back, and the question arises whether it is delivarable.By the way, the Belgian central bank is also keeping its gold in the US. Shouldn't we stop selling gold and call back our preciuous metals?