In 2000, Switzerland had two major banks, 24 cantonal banks, and numerous foreign-owned banks, savings banks, and other banks and finance companies. There were a total of 375 banks in the country in that year. The bank balance-sheet total per capita in Switzerland is higher than that of any other nation in the world. Total assets of the Swiss banking system amounted to $1.3 trillion at the end of 2000, while total securities deposits were $3.4 trillion. Moreover, registered banks and bank-like finance companies numbered 494 in 1995, offering the Swiss, on average, the greatest access to banking services of all the world's nations.
The government-supervised Swiss National Bank, incorporated in 1905 and the sole bank of issue, is a semiprivate institution owned by the cantons, by former banks of issue, and by the public. The National Bank acts as a central clearinghouse and participates in many foreign and domestic banking operations. The two big banks, (United Bank of Switzerland (UBS) and Credit Suisse Group) dominate the Swiss banking scene and are expanding aggressively overseas. They are universal banks, providing a full range of services to all types of customers.
Regional banks specialize in mortgage lending and credits for small businesses. Since 1994, most of the country's regional banks have been linked in a common holding company providing back-office operations and other services to members in a bid to cut costs.
Foreign banks make up about a third of banks active in Switzerland. In contrast to domestic banks, their numbers have risen over the last decade but their business is increasingly focused on asset management, mostly of funds from abroad. On 1 January 1995 a new banking law came into effect allowing for foreign banks to open subsidiaries, branches, or representative offices in the country without first getting approval of the Federal Banking Commission.
The transactions of private and foreign banks doing business in Switzerland traditionally play a significant role in both Swiss and foreign capital markets; however, precise accounting of assets and liabilities in this sector are not usually made available as public information. Switzerland's strong financial position and its tradition (protected by the penal code since 1934) of preserving the secrecy of individual bank depositors have made it a favorite depository with persons throughout the world. (However, Swiss secrecy provisions are not absolute and have been lifted to provide information in criminal investigations.) The Swiss Office for Compensation executes clearing traffic with foreign countries.
In 1997 Swiss banks came under heavy criticism for losing track of money, gold, and other valuables belonging to Jewish Holocaust victims and held by the banks during World War II. Records also showed the banks had closed thousands of victims' accounts without notice after the war. The banks claimed they had lost the old records, but a group of journalists found the records archived in Lausanne in April of that year.
Also in 1997, an embarrassed Swiss government selected four members to a panel empowered to run a fund for Holocaust victims. Nobel laureate Elie Weisel, a concentration camp survivor, turned down an invitation to serve as one of the three foreign members on the board. The fund, intended to help impoverished Holocaust victims and their families, is supported by funds appropriated by Nazis from Jews sent to concentration camps. Much of the gold, jewels, bonds, and currency taken by the Nazis had been placed in Swiss banks. In March 1998, Switzerland's banks agreed to create a $1.25 billion fund designed to compensate Holocaust survivors and their families.
Swiss banks were also under fire in 1997 for possibly facilitating money laundering of drug money accrued by a former Mexican president's brother and for failing to adequately recover the billions of dollars supposedly plundered by former Zaireian dictator Mobuto Sese Seko, who was overthrown that year. All the negative publicity has caused some to question the usefulness of Swiss banks' much-lauded secrecy.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $102.9 billion. In that same year, M2—an aggregate equal to M1— plus savings deposits, small time deposits, and money market mutual funds—was $326.3 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 1.65%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 1.59%.
Stock exchanges operate in Geneva (founded 1850), Basel(1875), and Zürich (1876). The Zürich exchange is the most important in the country. In terms of market capitalization, the Swiss stock exchanges rank seventh in the world, behind New York, Tokyo, Osaka, London, Frankfurt, and Paris, as of 1997. Overall, turnover, including shares, bonds, and options, amounted to CHF 1.2 trillion in 2002, a drop of 2.3% from the prior year. The open outcry stock exchanges in Zürich, Geneva, and Basel closed in 1994 when a national electronic stock exchange for all securities trading began operations in August.