The recent UBS-Credit Suisse merger created a massive bank that, if it fails, could harm the Swiss economy. Credit Suisse was about to be liquidated and sold to UBS until Saudi Arabia and the Gulf States threatened to withdraw their funds.
The Swiss banking system began to transition as a result of globalisation, which pushed the Swiss banking sector to relax its strict privacy regulations. As a result, fewer people are willing to invest in Switzerland.
The once-famous numbered accounts have been phased out, as has the old Swiss financial system. The Swiss financial system is now tied to Europe's globalised and westernised banking system, which weakens not only the Swiss banking system but also the banking systems of other Eurozone and US banks.
Bank failures are becoming more common, raising concerns about the value of storing funds in Swiss banks in the absence of the privacy and dependability that have traditionally been associated with them. Investors may choose to invest elsewhere if these features are not present.
Finally, the recent UBS-Credit Suisse merger, as well as concerns at Deutsche Bank, have highlighted the banking industry's fragility and the potential consequences of a large bank failure. The change of the Swiss financial sector to a more globalised and westernised model has resulted in a loss of trust and confidence among investors in Swiss institutions. As bank failures become more common, the lack of basic Swiss attributes such as privacy and integrity call into question the utility of holding money in Swiss banks. It will be interesting to see how the Swiss banking industry responds to these developments and regains investor confidence.
Source:
The Duran, 26 March 2023, "Deutsche Bank, too big to fail",