2016 was a historic financial year for Switzerland, with scenarios being enacted that would have seemed outrageous a few short years ago. Here, moneyland.ch provides a recap of the most significant financial happenings of 2016.
1. End of banking secrecy for EU citizens
If there is one event of 2016 which is likely to have a long-term impact on Switzerland as a financial center, it is the Swiss Federal Government’s decision to abolish banking secrecy for citizens of a large number of countries, including European Union member countries.
The National Council voted in favor of accepting rules stipulated by the Organisation for Economic Co-operation and Development (OECD), a lobbying organization funded largely by the governments of the United States and European Union countries.
In addition to taking on the OECD’s automatic data-sharing standards, the Federal Government also entered into automatic data exchange agreements with numerous non-OECD countries.
2. New consumer credit laws
The Swiss lending market saw major changes in 2016. Swiss credit card issuers are now limited to charging a maximum interest rate of 12% on outstanding balances, down from a maximum of 15% previously. A maximum interest rate of 10% can be charged for personal loans. More on this topic.
Another major change is the extension of legal waiting periods between loan applications and pay-outs from one week to two weeks, giving borrowers more time to cancel a loan if they change their mind. More on this topic.
3. Higher health insurance premiums
Increases in health insurance premiums of 5% or more have become something of an annual event, and 2016 was no exception. The past year also saw the Federal Office of Public Health announce yet another major hike in basic health insurance premiums. A moneyland.ch analysis showed that on average, health insurance premiums for 2017 are 5.3% higher than 2016 premiums.
4. Cryptocurrency disasters
2016 may have been the year that the Swiss federal railway started peddling Bitcoin to passengers, but it is also the year of some of the biggest heists in blockchain’s short history.
The saga started when hackers helped themselves to more than 50 million francs worth of Ether, a cryptocurrency hailed as the future of money, from Ethereum’s Zug-based decentralized autonomous organization. Shortly afterward, greedy computer geeks made off with around US$ 65 million worth of Bitcoin from Hong Kong exchange Bitfinex.
5. Credit Suisse spin-off
In another 2016 first, Switzerland saw one of its largest banks, Credit Suisse, officially divorce its international operations from its Swiss operations. The new Credit Suisse (Schweiz) AG, now a subsidiary of Credit Suisse, took over Swiss banking operations in November 2016 under primarily Swiss management. Separating the bank’s Swiss retail banking sector from its global investment banking operations should provide more security and localized solutions for Swiss Credit Suisse customers.
6. Pathetic interest rates for retirement savings
Swiss consumers hoping to retire with a decent income had to hold back their tears over 2016. The year saw interest rates paid out for retirement assets plunge to historical depths. 3a retirement account interest rates averaged just 0.49% in 2016, down from 1.4% just two years earlier.
7. Negative interest rates go retail
Paying someone to invest your money for their own profit might make zero financial sense but that isn’t keeping it from becoming the new norm. While some Swiss private banks have been charging select customers to hold their deposits, the decision made by PostFinance to impose negative interest rates on customers holding more than 1 million Swiss francs in their private accounts marks 2016 as the year that negative rates crossed the line into mainstream retail banking.
Prior to the move by PostFinance, only niche retail bank Alternative Bank imposed negative interest rates on private and savings account customers. Negative interest rates appeared at some Swiss banks, like the Zürcher Kantonalbank, in 2015 – but only for large institutional customers.