Written by Alfredo Piacentini, Managing Partner of DECALIA
Switzerland, so perfect and therefore envied by definition, finally seems to be stumbling. Yet preserving its advantages must remain a priority, without undermining the country’s competitiveness, now once again at the top of the IMD ranking.
With its postcard landscapes, industrial and financial know-how, wealth creation, and model of direct democracy, is Switzerland starting to wobble? That is, at any rate, what a Financial Times article published on the eve of Christmas dared to suggest. It is true that the past year has brought an unprecedented accumulation of crises, in a geopolitical context that is itself undergoing major change. Still, our Swiss franc continues to serve as a safe haven, the productivity of our companies is remarkable, and our public debt ratio is enough to make most of the world’s major economies pale. Let us hope that the Swiss authorities and the press will work to protect and cultivate this exceptionalism.
The collapse of Credit Suisse, scandals and governance issues at Nestlé, internal conflict at the World Economic Forum, threats to International Geneva, the saga of U.S. tariffs, security concerns voiced at the end of the lake by the commodity-trading sector, the Crans-Montana tragedy… enough already! Rarely has discreet Helvetia generated so much ink over such a short period.
That a certain Schadenfreude emerges among competing countries is neither surprising nor truly new: so perfect and therefore envied by definition, Switzerland finally seems to be stumbling.
Fierce competition
Indeed, in both finance and the trade in goods, the hour is one of fierce competition. With banking secrecy long since buried, the strengths of our financial centre now lie in the technical expertise and portfolio-management skills accumulated over decades combined with the stability of the political system and the strength of the currency.
Given that the financial centre accounts for around 10% of national GDP (not to mention all the related services provided by lawyers, notaries, trustees and tax advisers), it is vital to ensure that it is defended in the future rather than hindered.
Striking a balance between adapting the framework to international standards and preserving competitive advantages is certainly a delicate exercise one in which the authorities must be careful not to forget their protective role.
In this respect, beware of excessive regulation and a form of “Swiss finish” that could prove detrimental. Is it really appropriate to copy European MiFID rules word for word, when the profile of Swiss banking clients is quite unique, particularly in terms of sophistication? For historical reasons, Swiss wealth managers have learned to respond to very diverse demands, with a strong international dimension.
Broadening horizons
As for the tightening of capital requirements sought by the Federal Council, will it really prevent another banking failure? Especially given that Credit Suisse’s troubles were not necessarily linked to undercapitalisation, but rather to risk management.