With a share of an estimated 26% of the world market, the Swiss banking centre is the leader in this area.5 In addition, the two big banks, UBS and CS, are among the most important institutions worldwide in some areas of investment banking, such as derivatives and foreign exchange trading. How did Switzerland, a comparatively small country, end up with a banking centre with such a wide international reach? A number of different elements may serve to explain this. First, I would like to mention the conditions which make the banking centre attractive for international investors. They include political, legal and economic stability, reliable banks, and a convertible currency whose value remains stable. In addition, a role in the steady inflow of foreign funds was played by the banking secrecy provisions established in 1934 and the enhanced protection of privacy associated with these provisions. These advantages appear particularly striking from a historical point of view, since, after the two world wars, neutral Switzerland presented a great contrast to the surrounding countries, which were suffering from currency turmoil, inflation and an increased risk of expropriation.6 Second, Switzerland’s prosperity and the relatively narrow local capital market – in terms of Swiss economic power – mean that Swiss investors seek investment opportunities beyond the national borders. At the same time, our economy also has a strong international focus.
Fourth, the banks are faced with higher costs and lower income as a result of structural changes. Apart from international competition, this pressure on margins is mainly attributable to tougher regulatory and legal requirements, technological advances and the continuing low  8  During the same period, the big banks also built up substantial off-balance-sheet positions which were attributable to investment banking activities. BIS central bankers’ speeches  3  interest rate environment. It can be assumed that the structural transformation in the Swiss banking industry will accelerate further.9 Basic prerequisites for the success of the banking centre in the future As we have seen, it is in Switzerland’s interest to have an effective banking industry located here, which can supply the economy with financial services and thereby contribute to prosperity and affluence. However, in view of the challenges I have mentioned, the fundamental question I posed in my introduction arises: Can Switzerland, as a relatively small country, continue to provide a home to a banking centre whose importance is global in nature? To ensure that this is possible, both smaller, regional banks and larger, international banks will be needed in future. Because of the broad structure of the Swiss economy, it can be assumed that customer requirements are also very multifaceted and diverse. A mix of different kinds of banks can make a contribution to meeting these requirements as efficiently as possible. Moreover, a diversified banking structure helps to ensure that a crisis at individual institutions or in individual areas of business is better absorbed.