Legacy: asset management, gold and the safe-haven franc

The global asset manager

The most important legacy of the post-war decades is the position of Zurich as one of the world’s leading centres for the management of private wealth. The foundations were laid before 1939, as earlier chapters have shown, but the scale of the business was created between 1945 and 1980. By the beginning of the twenty-first century, according to the Historical Dictionary of Switzerland, Swiss institutions administered about a third of the world’s cross-border private wealth.¹ The ingredients of that success were those that this chapter has described: a freely usable, strong and stable currency, a political system that inspired confidence, banks with the capacity to place client money in every major market, statutory confidentiality and a tax regime that, through the fiduciary deposit and the absence of withholding tax on many foreign-source investments, allowed foreign clients to earn international returns without Swiss tax. Some of these ingredients have since disappeared. The automatic exchange of information has ended the tax advantage for foreign clients. The financial crisis of 2008 and the collapse of Credit Suisse in 2023 have damaged the reputation of the big banks. The currency, the political stability and the concentration of expertise remain.

The post-war period also created a professional culture that still marks Zurich. The relationship manager who knows his clients’ families across generations, the investment committee that allocates client money across global markets, the fiduciary department and the custody business are all institutional forms that took shape in these decades. So did the close and often informal relationship between the big banks and the authorities. The Swiss National Bank’s habit of working through agreements with the banks, visible from the first gentlemen’s agreement of 1950 to the currency agreements of the 1970s, anticipated the regulatory style of self-regulation under supervisory recognition that still characterises Swiss financial market law. The code of conduct on due diligence, the Swiss Bankers Association’s guidelines on asset management and the many self-regulatory organisations of the anti-money-laundering system are its descendants.

The gold centre

The second legacy is Zurich’s role in gold. The trading pool of 1968 has long disappeared, while London has regained its position as the centre of the wholesale over-the-counter market in gold. The physical side of the business, however, remains overwhelmingly Swiss. The refineries that grew up in the post-war decades, most of them in Ticino and western Switzerland and several of them long owned by the Zurich big banks, today account for about two-thirds of the world’s annual refinery output. Swiss trade figures for the years around 2012 to 2014 show gold flows of between roughly 1,600 and 2,800 tonnes a year in each direction, with the United Kingdom as the largest supplier. Much of the refining industry’s work consists in converting large London bars into the smaller formats demanded by Asian buyers.²

This legacy carries risks that the post-war generation did not see, or chose not to see. Just as the trade with apartheid South Africa and the Soviet Union raised political questions in the 1970s and 1980s, the origin of gold from conflict areas and artisanal mines raises questions of due diligence, human rights and money laundering today. The regulation of precious metals refiners under the Precious Metals Control Act and the anti-money-laundering law, together with the debates about responsible sourcing, is the present-day continuation of a business model whose foundations were laid in March 1968.

The image of the gnome

The third legacy is reputational. The phrase coined in the House of Commons in 1956 and made famous in the sterling crisis of 1964 has never disappeared. It resurfaced in the controversies over the Marcos and Abacha assets, in the dormant-accounts affair of the 1990s and in the tax disputes after 2008. It still appears in the international press whenever Swiss banks are accused of hiding money or undermining other countries’ policies. For practitioners in Zurich, the image has a practical consequence that is easy to state. Any Swiss arrangement that serves foreign clients is scrutinised with particular suspicion abroad, so that Swiss institutions must be able to explain the legitimate purpose of what they do more convincingly than their competitors in London, Luxembourg or Singapore. Geneva, whose private bankers were no less discreet, largely escaped the label. The city on Lake Geneva was associated with old family banking and international diplomacy, whereas Zurich, as the seat of the big banks and the gold pool, became the symbol of anonymous financial power.

The safe-haven dynamic in 2011 and 2015

The fourth legacy is monetary. The pattern of the 1970s, in which international turbulence drove money into the franc, the franc appreciated to levels that threatened Swiss industry and the central bank had to choose between accepting the appreciation and defending an exchange rate, repeated itself with remarkable fidelity after the financial crisis of 2008. As the euro crisis deepened, the franc rose so strongly against the euro that the SNB spoke of a massive overvaluation. On 6 September 2011 it introduced a minimum exchange rate of 1.20 francs to the euro, declaring itself ready to buy foreign currency in unlimited quantities to enforce it.³ Jordan later described the floor as a measure taken in a period of exceptional overvaluation.⁴ The parallel with the target of October 1978 was obvious to contemporaries. Kurt Schiltknecht, interviewed in January 2011, had already drawn the comparison and noted that the circumstances of 1978 had been even more dramatic.⁵

The minimum rate held for more than three years. On 15 January 2015 the SNB discontinued it. The minimum rate, it explained, had been introduced during a period of exceptional overvaluation and extremely high uncertainty in the financial markets, whereas enforcing it was no longer justified once the overvaluation had diminished and the monetary policies of the major currency areas had diverged. At the same time it lowered the interest rate on sight deposits above an exemption threshold to minus 0.75 per cent.⁶ Negative interest had returned to Switzerland, this time as a general instrument of monetary policy applied to bank reserves, where the 1970s had used it as a targeted charge on foreign money. Samuel Weber’s survey of SNB policy explains the franc’s safe-haven status by the absence of commercial and financial restrictions, political neutrality, direct democracy, low inflation, moderate taxes and fiscally disciplined government.⁷ Each of these factors was already present in the 1960s and 1970s. The historical research of Baltensperger and Kugler suggests that the franc acquired its status as a strong currency after the First World War. Over the long run, they find, it has appreciated in real terms against the dollar and sterling by roughly 0.9 per cent a year.⁸

The practical lesson for the financial centre is that the strength of the franc is both its greatest asset and its most persistent problem. While it attracts the wealth that Zurich manages, it periodically forces the central bank into policies that impose costs on savers, pension funds and banks. A fiduciary deposit placed in 1975 and a sight deposit at the SNB in 2015 were both subject to charges designed to deter holders of francs. The Zurich lawyer advising a foreign family office on currency exposure, or a pension fund on negative returns, is working within a pattern first established in the years this chapter has described.

Notes

1. HLS, “Finanzplatz”, https://hls-dhs-dss.ch/de/articles/045549/2017-09-27/. ↩
2. BullionStar, “Swiss Gold Market”, section on trade volumes, https://www.bullionstar.com/gold-university/swiss-gold-market. The article gives Swiss gold imports of about 1,800 tonnes in 2012, about 2,600 tonnes in 2013 and about 1,750 tonnes in 2014. ↩
3. SNB, “Monetary and currency policy chronicle”, https://www.snb.ch/en/the-snb/organisation/history/geld-und-waehrungspolitische-chronik, entry of 6 September 2011: the SNB set a minimum exchange rate of CHF 1.20 per euro and declared itself prepared to “purchase foreign currency in unlimited quantities” to enforce it. ↩
4. Thomas J. Jordan, “The rationale for discontinuing the minimum exchange rate and lowering interest rates”, speech of 15 January 2015, BIS Central Bankers’ Speeches, https://www.bis.org/review/r150116a.htm. ↩
5. 20 Minuten, “«Die Situation war 1978 viel dramatischer»”, 14 January 2011, https://www.20min.ch/story/die-situation-war-1978-viel-dramatischer-306576348885. ↩
6. Thomas J. Jordan, speech of 15 January 2015, BIS Central Bankers’ Speeches, https://www.bis.org/review/r150116a.htm; Fritz Zurbrügg, “After the minimum exchange rate: new monetary policy challenges”, speech at the Money Market Event, Zurich, 26 March 2015, https://www.snb.ch/en/publications/communication/speeches/2015/ref_20150326_zur. ↩
7. Samuel S. Weber, “Swiss National Bank and Swiss Franc’s Role in Global Financial Markets”, in Swiss Finance (Palgrave Macmillan, 2023), https://link.springer.com/chapter/10.1007/978-3-031-23194-0_7. ↩
8. Ernst Baltensperger and Peter Kugler, “Wie der Franken zu seiner Stärke kam”, Die Volkswirtschaft, 22 September 2016, https://dievolkswirtschaft.ch/de/2016/09/wie-der-franken-zu-seiner-staerke-kam/. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.