Abstract
This chapter explores two dimensions of financial privacy, the demise of Swiss banking secrecy and arguments for the elimination of physical cash. Financial records are among the most sensitive forms of personal data, containing intimate details about individual daily activities and preferences. The chapter first looks at the history and trajectory of Swiss banking secrecy. Swiss banking secrecy formally developed in order to protect bank account holders from possibly intrusive prudential regulatory surveillance. In response to heavy pressure from high tax jurisdictions, the Swiss have been forced to reduce those secrecy protections. However the evidence suggests that banking secrecy was more valued for privacy rather than tax evasion reasons. The chapter then considers the arguments, most prominently aired by Kenneth Rogoff in his book The Curse of Cash, to eliminate large denomination physical currency. It finds that there are many other reasons apart from the desire to hold cash for criminal purposes to seek an anonymous payments system.
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Notes
- 1.
Yves-Alexandre De Montjoye, Laura Radaelli, and Vivek Kumar Singh, “Unique in the Shopping Mall: On the Reidentifiability of Credit Card Metadata,” Science 347, no. 6221 (2015).
- 2.
Tax Justice Network, “Financial Secrecy Index 2015: Narrative Report on Switzerland,” (2018).
- 3.
Sinclair Davidson and I offer an overview of the tax haven and profit shifting debate in Chris Berg and Sinclair Davidson, “‘Stop This Greed’: The Tax-Avoidance Political Campaign in the OECD and Australia,” Econ Journal Watch 14, no. 1 (2017).
- 4.
Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: The Belknap Press of Harvard University Press, 2014), 521.
- 5.
Swiss Bankers Association, “Protection of Privacy,” http://www.swissbanking.org/en/topics/information-for-private-clients/protection-of-privacy.
- 6.
R. Palan, R. Murphy, and C. Chavagneux, Tax Havens: How Globalization Really Works (Ithaca, NY: Cornell University Press, 2013).
- 7.
Much of this history is drawn from Sébastien Guex, “The Origins of the Swiss Banking Secrecy Law and Its Repercussions for Swiss Federal Policy,” Business History Review 74, no. 2 (2000); Robert Vogler, “The Genesis of Swiss Banking Secrecy: Political and Economic Environment,” Financial History Review 8, no. 1 (2001); Christophe Farquet, “Tax Avoidance, Collective Resistance, and International Negotiations: Foreign Tax Refusal by Swiss Banks and Industries between the Two World Wars,” Journal of Policy History 25, no. 3 (2013).
- 8.
Guex, 246.
- 9.
Ibid.
- 10.
Cited in Chris Berg, “The Curtin-Chifley Origins of the Australian Bank Deposit Guarantee,” Agenda: A Journal of Policy Analysis and Reform 22, no. 1 (2015), 32; see also Chris Berg, “Safety and Soundness: An Economic History of Prudential Bank Regulation in Australia, 1893–2008,” PhD Thesis (RMIT University, 2016).
- 11.
This schema comes from Simon Steinlin and Christine Trampusch, “Institutional Shrinkage: The Deviant Case of Swiss Banking Secrecy,” Regulation & Governance 6, no. 2 (2012).
- 12.
François-Xavier Delaloye, Michel A. Habib, and Alexandre Ziegler, “Swiss Banking Secrecy: The Stock Market Evidence,” Financial Markets and Portfolio Management 26, no. 1 (2012).
- 13.
Parliamentary Assembly, “Co-Operation between Council of Europe Member States against International Tax Avoidance and Evasion,” (Council of Europe, 1978); Richard A. Gordon, “Tax Havens and Their Use by United States Taxpayers: An Overview,” (Washington, DC: Department of the Treasury, Internal Revenue Service, 1981), 21.
- 14.
Organisation for Economic Co-operation and Development, Taxation and the Abuse of Bank Secrecy (Paris: OECD Publishing, 1985).
- 15.
Harmful Tax Competition an Emerging Global Issue (Paris: OECD Publishing, 1998); Improving Access to Bank Information for Tax Purposes (Paris: OECD Publishing, 2000).
- 16.
G20, “The Global Plan for Recovery and Reform,” (2009).
- 17.
Organisation for Economic Co-operation and Development, “Addressing Base Erosion and Profit Shifting,” (Paris: OECD Publishing, 2013); “A Progress Report on the Jurisdictions Surveyed by the OECD Global Forum in Implementing the Internationally Agreed Tax Standard,” (Paris: OECD Publishing, 2009).
- 18.
Berg and Davidson.
- 19.
Delaloye, Habib, and Ziegler, 174.
- 20.
Chris Edwards and Daniel J. Mitchell, Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It (Washington, DC: Cato Institute, 2008).
- 21.
Kenneth S. Rogoff, The Curse of Cash (Princeton: Princeton University Press, 2016).
- 22.
Gary S. Becker and Julio J. Elias, “Introducing Incentives in the Market for Living Organ Donations,” The Journal of Economic Perspectives 21, no. 3 (2007).
- 23.
Alvin Roth, Who Gets What—And Why: The Hidden World of Matchmaking and Market Design (London: William Collins, 2015).
- 24.
“Why Marijuana Retailers Can’t Use Banks,” The Economist, 22 January 2018.
- 25.
Maria Tzanou, The Fundamental Right to Data Protection: Normative Value in the Context of Counter-Terrorism Surveillance (New York and London: Bloomsbury Publishing, 2017); Laura Poitras, Marcel Rosenbach, and Holger Stark, “‘Follow the Money’: Nsa Monitors Financial World,” Der Spiegel, 16 September 2013.
- 26.
Article 29 Working Party, “Press Release on the Swift Case Following the Adoption of the Article 29 Working Party Opinion on the Processing of Personal Data by the Society for Worldwide Interbank Financial Telecommunication (Swift),” (2006).
- 27.
Charles M. Kahn, James McAndrews, and William Roberds, “Money is Privacy,” International Economic Review 46, no. 2 (2005).
- 28.
Amanda Billner, “In Shadow of Facebook, Cashless Sweden Fears Data Privacy Risks,” Bloomberg, 23 March 2018.
- 29.
“Financial Abuse: Protecting Your Money from Others,” Australian Securities and Investment Commission, https://www.moneysmart.gov.au/life-events-and-you/families/financial-abuse.
Bibliography
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Becker, Gary S., and Julio J. Elias. “Introducing Incentives in the Market for Living Organ Donations.” The Journal of Economic Perspectives 21, no. 3 (2007).
Berg, Chris. “The Curtin-Chifley Origins of the Australian Bank Deposit Guarantee.” Agenda: A Journal of Policy Analysis and Reform 22, no. 1 (2015): 21.
———. “Safety and Soundness: An Economic History of Prudential Bank Regulation in Australia, 1893–2008.” PhD thesis. RMIT University, 2016.
Berg, Chris, and Sinclair Davidson. “‘Stop This Greed’: The Tax-Avoidance Political Campaign in the Oecd and Australia.” Econ Journal Watch 14, no. 1 (2017): 77–102.
Billner, Amanda. “In Shadow of Facebook, Cashless Sweden Fears Data Privacy Risks.” Bloomberg, 23 March 2018.
De Montjoye, Yves-Alexandre, Laura Radaelli, and Vivek Kumar Singh. “Unique in the Shopping Mall: On the Reidentifiability of Credit Card Metadata.” Science 347, no. 6221 (2015): 536–39.
Delaloye, François-Xavier, Michel A. Habib, and Alexandre Ziegler. “Swiss Banking Secrecy: The Stock Market Evidence.” Financial Markets and Portfolio Management 26, no. 1 (2012): 143–76.
Edwards, Chris, and Daniel J. Mitchell. Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It. Washington, DC: Cato Institute, 2008.
Farquet, Christophe. “Tax Avoidance, Collective Resistance, and International Negotiations: Foreign Tax Refusal by Swiss Banks and Industries between the Two World Wars.” Journal of Policy History 25, no. 3 (2013): 334–53.
“Financial Abuse: Protecting Your Money from Others.” Australian Securities and Investment Commission, https://www.moneysmart.gov.au/life-events-and-you/families/financial-abuse.
G20. “The Global Plan for Recovery and Reform.” 2009.
Gordon, Richard A. “Tax Havens and Their Use by United States Taxpayers: An Overview.” Washington, DC: Department of the Treasury, Internal Revenue Service, 1981.
Guex, Sébastien. “The Origins of the Swiss Banking Secrecy Law and Its Repercussions for Swiss Federal Policy.” Business History Review 74, no. 2 (2000): 237–66.
Kahn, Charles M., James McAndrews, and William Roberds. “Money is Privacy.” International Economic Review 46, no. 2 (2005): 377–99.
Organisation for Economic Co-operation and Development. “Addressing Base Erosion and Profit Shifting.” Paris: OECD Publishing, 2013.
———. Harmful Tax Competition an Emerging Global Issue. Paris: OECD Publishing, 1998.
———. Improving Access to Bank Information for Tax Purposes. Paris: OECD Publishing, 2000.
———. “A Progress Report on the Jurisdictions Surveyed by the Oecd Global Forum in Implementing the Internationally Agreed Tax Standard.” Paris: OECD Publishing, 2009.
———. Taxation and the Abuse of Bank Secrecy. Paris: OECD Publishing, 1985.
Palan, R., R. Murphy, and C. Chavagneux. Tax Havens: How Globalization Really Works. Ithaca, NY: Cornell University Press, 2013.
Parliamentary Assembly. “Co-Operation between Council of Europe Member States against International Tax Avoidance and Evasion.” Council of Europe, 1978.
Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, MA: The Belknap Press of Harvard University Press, 2014.
Poitras, Laura, Marcel Rosenbach, and Holger Stark. “‘Follow the Money’: Nsa Monitors Financial World.” Der Spiegel, 16 September 2013.
Rogoff, Kenneth S. The Curse of Cash. Princeton: Princeton University Press, 2016.
Roth, Alvin. Who Gets What—And Why: The Hidden World of Matchmaking and Market Design. London: William Collins, 2015.
Steinlin, Simon, and Christine Trampusch. “Institutional Shrinkage: The Deviant Case of Swiss Banking Secrecy.” Regulation & Governance 6, no. 2 (2012): 242–59.
Swiss Bankers Association. “Protection of Privacy.” http://www.swissbanking.org/en/topics/information-for-private-clients/protection-of-privacy.
Tax Justice Network. “Financial Secrecy Index 2015: Narrative Report on Switzerland.” 2018.
Tzanou, Maria. The Fundamental Right to Data Protection: Normative Value in the Context of Counter-Terrorism Surveillance. New York and London: Bloomsbury Publishing, 2017.
Vogler, Robert. “The Genesis of Swiss Banking Secrecy: Political and Economic Environment.” Financial History Review 8, no. 1 (2001): 73–84.
“Why Marijuana Retailers Can’t Use Banks.” The Economist, 22 January 2018.
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Berg, C. (2018). Financial Privacy. In: The Classical Liberal Case for Privacy in a World of Surveillance and Technological Change. Palgrave Studies in Classical Liberalism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96583-3_11
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