«It’s The Bank Secrecy Law, Stupid!»

Posted on February 7, 2010 by Markus Stocker, Recommended 1 | Recommend

The German Finance Minister Wolfgang Schäuble has spoken: “Switzerland’s bank secrecy law has no place in the 21st century.” For starters, what in Switzerland in German is called Bankkundengeheimnis — bank client confidentiality– is the safeguard of financial privacy, not the secrecy of the bank, as I argued almost a year ago.

I’m sure Mr. Schäuble is a reasonable man and I respect his opinion. Cross-border tax cheats as well as banks that resort to illegal practices are a problem that likely contributes to the financial destabilization of countries [1] and is probably pronounced in our ever more global world and in times of recession. However, I’m not sure if stating that “we will disestablish the bank secrecy in Europe” (Wolfgang Schäuble, interview with NZZ) is the most sensible approach.

What Mr. Schäuble does not appreciate is the core idea of the Swiss bank client confidentiality, namely, the freedom of financial privacy. Disestablishing the “bank secrecy” equals to giving up individual freedom and move power into the hands of a few, the likes of Mr. Schäuble or government at large, a dynamic that is inherently problematic. Homo sapiens with power has yet to evolve into knowing and wise.

Freedom never comes for free. With respect to bank client confidentiality, Swiss law sets decisional power into the hands of each individual. You, as holder of a Swiss bank account, are free and responsible to do the right thing, a privilege that comes with a price tag, i.e. to file a tax return faithfully knowing you could do differently. In the interview with NZZ, Mr. Schäuble argues that “he wants to assure the people of Germany that nobody can withdraw from tax liability.” I quote,

Er [Herr Schäuble] wolle vor allem den Menschen in Deutschland das Gefühl geben, dass sich niemand seiner Steuerpflicht entziehen könne. (NZZ)

Do we really trust an anonymous, transient, non-transparent, government made of people more than our neighbor or, for that matter, a random person, that it will not abuse of power? To me, Mr. Schäuble’s parental-like authority sounds more like the irate voice of a teacher who feels the urge to castigate students because (s)he has lost the attention of a few. My voice goes more along Pink Floyd’s lines “We don’t need no education//We don’t need no thought control,” Mr. Schäuble.

On the contrary, I wonder what speaks against introducing bank client confidentiality everywhere.

[1] Werner Vontobel und Viktor Parma. Schurkenstaat Schweiz?: Wie sich der größte Bankenstaat der Welt korrumpiert und andere Länder destabilisiert. C. Bertelsmann Verlag, Januar 2009, ISBN: 978-3-570-01083-9

Category: Ethics, International, Politics, Thoughts
Tags: Banks > Europe > Freedom > Germany > Privacy > Responsibility > Switzerland > Tax > Trust > Waters

Comments

2 Responses to “«It’s The Bank Secrecy Law, Stupid!»”

Thomas Zaslavsky
February 8th, 2010 @ 7:00 am

Mr. Stocker, you have a great deal of faith in the intrinsic honesty of bank clients, not to say bankers.

Recent events have shown the latter to be questionable. Less recent events have shown (some big) banks to be willing to cooperate in breaking banking laws to launder money. I refer to major U.S. banks — perhaps Swiss banks are more honest but as UBS has been a major player in the U.S. I would have to be convinced they are any different.

The honesty of bank clients is up to the client. Such self-enforcement schemes just don’t work. I doubt they work in Schweitz. They don’t work in the U.S. The richer people are, the more they seem to be dishonest. Maybe that’s an overgeneralization from the fact that the banks (in the U.S., at least) demand that people pay off their inflated mortgages at full rate but that they themselves receive government subsidies without corresponding responsibilities or restrictions.

You must have guessed I’m a U.S.-er (an “American”). I don’t see a reason to believe foreign banks are more honest than American ones. Maybe there is such a reason? But since people are the same all over….
Markus Stocker
February 8th, 2010 @ 11:19 am

Thomas,

You are quite right, I have a faith in the honesty of people [1]. (Actually, it’s not a faith as much as a lifestyle, I think.) However, I must admit, it doesn’t always come for free, sometimes I need to work for it to keep the faith in place. But I do think, having a some faith (or a great deal of it) is useful, or perhaps it just makes me naive.

I agree with you, recent events regarding some banks and bank clients make my reasoning questionable. I don’t think, Swiss banks (or people) are intrinsically better than U.S. banks. As we say in Swiss German, they, too, are likely to have a lot of “Dräck am Stäcke” (literally, “dirt on the stick” meaning “to have a skeleton in the closet,” if I got the idiom right).

I don’t have a particular problem with seeing the bank client confidentiality history, at least technically, but I do think, this would be more than just a practice that to some doesn’t quite fit into the 21st century that would disappear.

Ultimately, I think it is also a matter of diversity that is given up in the name of global conformity to a single system which, I’m afraid, is growing more and more centralized. Perhaps this is a necessary condition in our global world. Whether or not it is wise, history will tell.

[1] Incidentally, I’m currently living in Finland, a country with people that, for sure at first sight, seem to nurture and value honesty.

Share Your Thoughts - We'd Like To Learn From You!

The United States spends more on trash bags than 90 other countries spend on everything.

Polly LaBarre

About

Trying to unlearn holding onto
any particular view • my gratitude goes to you as a reader and objector • feel free to contact me

firstname.lastname@gmail.com
twitter.com/markusstocker