The title of my book, Conspiracy Suisse, may be attributed to several aspects of the story. There is a retelling of the history of Switzerland that differs from schoolbooks which was – according to the main protagonist of the novel – intentionally kept hidden from the public. The suggestion is made that the historical Knights Templar survived as an organization in Switzerland until today to which only few members at the top echelon of Swiss society are privy in spite of their having significantly influenced the development of the country. But more than these and other speculative conjectures that purport to fill in gaps in historical records, the main argument that is put forward in the book is that there exists – as part of ongoing international bank wars – a conspiracy to deliberately undermine Swiss banking by foreign sources, in the novel represented by the fictional British bank BRB and its chairman. Below explanations should serve to put this rather hyperbolic proposition, which I refer to as “The Banking Conspiracy” in other parts of the website, into some rational perspective.
Struggles Between Financial Powers
As the banking history I’ve included in another blog post shows, financial powers, from aristocratic families in Medieval Europe to International Banks in the 21st century have always struggled with one another for supremacy. While earlier conflicts involved regional city-states acting against each other, such as the Venetians fighting the Genoese in the 13th and 14th centuries, these later evolved to national battles, where the main question constantly was whose money would dominate the trade. It indeed has always been about money.
For more than three centuries, the British Empire stood as the biggest empire in history. Its bankers in London, the only global financial center on the planet, declared the strength of its currency, the pound sterling, as the British army triumphed over all others. Without going too far back, following quote attributed to Benjamin Franklin exemplifies the point: “The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money…” Later, Alexander Hamilton, the first Secretary of the Treasury, would confirm in many of his essays how important it was for their independence that the United States could issue its own currency, the dollar.
Fast forward to the aftermath of World War II when the mighty British Empire started to decline.
Britain’s status as one of the world’s leading powers basically came to an end with the Suez Crisis in 1956 when a run on pound sterling was triggered under suspicions that it was instigated by the US administration. Britain restricted the international lending by its banks in order to preserve the value of the pound, curtailing all overseas investments. British elites started looking for a new position in a changing world as they watched their money, privileges, and empire crumble.
Britain’s Second Empire
Although the exact circumstances are unknown, representatives of the banks that made up the Bank of England arrived at a consensus that was never documented but was evident from its consequences. In the event where banks acted as a middleman in a foreign currency such as the dollar, between two non-residents, the Bank of England would not regard this specific intermediation or transaction as falling under its purview. Thus the London Eurodollar market was established by the banks as a place to trade dollars in London.
Banks maintained two sets of accounts to distinguish their Euromarket activity from their domestic banking operations. The UK regulator, the Bank of England, stated that it had no jurisdiction to regulate the London Euromarket accounts because they were located outside of London. It started acting as if transactions were not happening in the economy where they actually were, removing activity from the area where it is subject to regulations and taxes and passing it off as occurring somewhere else. Irrelevant where. Just elsewhere.
American banks relocated their overseas operations to the City after realizing that London provided a way to circumvent US rules. Around the same time, in Britain’s foreign territories — the final bastions of empire — far from London, a new type of financial arena started to take shape. Arriving in the Cayman Islands and other British dependencies, accountants and attorneys from London started drafting laws and regulations pertaining to financial secrecy. These areas were dubbed secrecy jurisdictions since confidentiality was their primary selling point. Their number one competitor in the world was Switzerland.
Numbered Accounts versus Trusts
Early in the 20th century, Switzerland established a culture of banking secrecy, with the Swiss Banking Law of 1934 serving as a key turning point. The rule, which forbade Swiss banks from disclosing account owners’ identities, contributed to Switzerland’s reputation as a discreet and private global financial hub. The goal of keeping Swiss banks secret was to draw in and safeguard foreign customers, particularly those looking to shelter their money. Swiss banks gained a reputation for secrecy over time, which made them a well-liked option for people and organizations wishing to protect their assets.
In that sense, Britain arrived late in the game of secret banking. However, unlike numbered accounts, the foundation of the British secrecy model is the trust, which allows intricate offshore structures to be built that are nearly impossible to breach. These arrangements are intended to conceal the identities of offshore asset owners and facilitate the recycling of offshore riches back into international markets. With the help of inventive bankers, lawyers, and accountants London quickly made up for lost time.
The Eurodollar market expanded quickly due to easy access to substantial offshore funds in the British Virgin Islands, Cayman Islands, Bermuda, and other dependencies. By 1980, it had reached $500 billion, and by 1988, it had reached $4.8 trillion. By 1997, almost 90% of all international loans were made through this market. The British Empire had collapsed, leaving very little in its wake, but the City of London had survived by adapting. And they were ready and willing to kill off banking secrecy to capture an even larger market share.
The United States Joins the Bank Wars
During the Vietnam War an excessive amount of US dollars were flowing out of the country. In 1967 the US State Department started looking for ways to return the flight capital back to the country through the Chase Manhattan Bank, which was explicitly asked how the US could take the place of Switzerland. A plan was developed to organize offshore banking centers in the Caribbean and elsewhere to stop the outflow of dollars and support the value of its currency. However, the inflow of money of Latin American criminals, drug dealers, and all sorts of organized crime bosses soon caused unexpected side effects, one of which was the rapid decline of the US manufacturing base as money flowed into real estate speculation, financial speculation, and foreign currency trade. So the Americans chose rather to support the London Eurodollar market which the British had in the meantime perfected.
Britain’s offshore havens expanded quickly under the tacit support of the United States, and soon the offshore system became the preeminent international financial market in the world accounting for nearly $50 trillion. While British politicians pretend to be tough on corruption and secrecy jurisdictions in public, their actions actually have the opposite effect. After all, the wealth of Britain’s elites, including past ministers of state, comes from financial services.
The Aftermath of 9/11
After the fall of the Soviet Union left the United States as the only superpower, there was a strong sentiment among neoconservative members of the Bush Junior administration, including Dick Cheney, Donald Rumsfeld, and Paul Wolfowitz who signed the Project for the New American Century, to promote the United States to the position of the undisputed global leader of the world. This was to include financial supremacy. In the novel, the banking expert Elena Lehning explains the situation as follows:
After 9/11, the US government wanted to control the flow of money more tightly, worldwide. This was justified primarily by the argument that financing global terrorism and drug trafficking had to be stopped. But in fact, it was part of an already ongoing effort by not only the US but also other governments to scrutinize the monetary flow to keep the money of affluent citizens from escaping to Switzerland and other offshore centers. The US government wants the money in Swiss banks to flow to their banks, and not only those of their own citizens. Britain especially suffered greatly when the US government forced a move of offshore business activities from the colonial centers of the British Empire, such as the British Virgin Islands, Cayman Islands, Bahamas, Mauritius, and Seychelles, to Delaware, Nevada, Montana, and so on. The City of London is trying desperately to overtake Swiss banking to keep its Second Empire afloat. Besides, the Swiss banking system is a thorn in the side of the centralization of banking because Switzerland has refused time and again to join the international world order as a result of its deep-rooted popular democracy. Very often, when the world establishment wants to make a move toward tightening control, Switzerland doesn’t join in and goes its separate way, insisting on the stringent protection of the privacy of individuals, undermining their efforts. Everyone is preparing for the digital currency wars.
