The Politics of Financial Intransparency: The Case of Swiss Banking Secrecy

In parallel to the growing weight of finance in the global economy, the transparency of financial flows and asset ownership has attracted increasing attention, a process further accelerated by the 2007/8 global financial crisis. Tax‐starved governments want to know the assets their residents own but financial intransparency can make tax collection difficult by obscuring both the ownership of assets as well as their real size. This article reviews three interrelated strands of literature on financial intransparency with a special emphasis given to one of its most prominent examples: Swiss‐style banking secrecy. First, I discuss the challenge of financial intransparency in a globalized economy and document the central role Switzerland plays as an offshore financial centre. I show that while Swiss‐style banking secrecy is an important example of financial intransparency, possible tax evaders also have other instruments at their disposal. Second, a review of the literature on the origins of Swiss banking secrecy shows how struggles for interpretive dominance shape the politics of financial intransparency. Third, I discuss the literature on the first OECD campaign against tax havens and demonstrate that representatives of the Swiss political‐economic system could have anticipated the shift of attention from small island states to OECD member states like Switzerland. Given the writing on the wall, it is surprising that recent developments have caught Swiss banks flat‐footed.