The eurozone debt crisis and fear that loose policy by central banks will stoke inflation have sent investors in search of extra security. New deals to prevent secret bank accounts in Switzerland being used for evading taxes may also be contributing to the trend.
Some banks in Switzerland, known for its financial stability, say they have even run out of space.
“We are experiencing a rise in demand for safety deposit boxes. This rise can’t really be quantified, however. In many branches the safe deposit boxes are fully rented,” said Albert Steck, spokesman at Migros Bank, a cooperative bank which serves retail clients.
Zuercher Kantonalbank (ZKB) said requests for space in safes has climbed this year, as the eurozone debt crisis deepened and the outlook for the global economy worsened.
“Since the start of the year demand for safe deposit boxes has risen in the low single digits,” ZKB spokesman Igor Moser said.
Baloise, an insurance company, said several bank clients had asked recently to raise the amount of coverage for the contents of safe deposit boxes.
“It’s therefore likely that safes at some banks are somewhat fuller than they were a few years ago,” Baloise spokeswoman Jeanine Hoppe said.
Another sign that anxiety is rising is that a phenomenon last seen when the financial crisis erupted in 2008 has reappeared: Appetite for Swiss franc bills has grown, according to Swiss National Bank (SNB) data.
“This development was due largely to high demand for 1,000 franc [US$1,046] notes, which points to the fact that the additional demand was primarily for storing money,” an SNB spokesman said.
With central banks around the world flooding markets with liquidity, some people fear spiraling inflation. The wealthy want assets that keep their value if prices rises.
“So much money has been pumped into the system that people are worried about inflation down the road,” said Bruno S. Frey, professor of economics at the University of Zurich. “You counter that by buying real assets of material value.”
Gold is one option. An Italian businessman was recently caught trying to smuggle gold bars into Switzerland under his car seat. In further evidence of rising interest in gold, ZKB has seen demand for its gold-backed exchange-traded fund rise over 20 percent since 2009.
Fine art and property are also considered sure bets in troubled times. The Swiss housing market is booming and the price of fine art has been on the up.
“Assets barely earn interest and blue-chip stocks move in one week what they used to move in one year,” said Ulrich Koerner, chief operating officer of Swiss flagship bank UBS. “Against that backdrop, some people say they would rather buy a nice painting instead of a mutual fund.”
The interest in real assets and in safe-deposit boxes may also be linked to offshore clients of Swiss banks, looking to find a way to circumvent pending deals with Germany, Austria and the UK that would tax their secret accounts.
Safe deposit boxes are not included in the tax deals, because their contents are not considered bankable assets.
Switzerland says safe deposit boxes cannot be used as a way for lots of people to get out of paying tax.
“It’s not a way for people to escape the tax deal on a large scale,” said Mario Tuor, spokesman for the Swiss federal office in charge of negotiating the agreements.
If account balances declined by more than 20 percent in the past two years, then the retroactive levy will be assessed based on the balance in late 2010, he said, precisely to prevent people from pulling money from their accounts.
However, one private banker in Zurich said last month that he was giving his “smaller” clients with less than US$2 million in funds the following advice: “If you have a small amount of undeclared money, the smartest thing you can do is withdraw it in cash and put it into a safe deposit box.”
The bilateral tax deals, which are scheduled to come into effect next year, preserve privacy by imposing a one-off levy on undeclared legacy capital, plus a tax on future earnings. Clients who refuse the tax face having their names revealed to foreign tax officials.
There are no official data on how much undeclared wealth is sitting in Switzerland, whose banks hold about US$2 trillion in offshore assets. However, according to some estimates, Germans alone have 200 billion euros (US$251.6 billion) in untaxed funds in Switzerland.
Additional reporting by Katharina Bart in Zurich and Illaria Polleschi in Milan
On May 7, 1971, Henry Kissinger planned his first, ultra-secret mission to China and pondered whether it would be better to meet his Chinese interlocutors “in Pakistan where the Pakistanis would tape the meeting — or in China where the Chinese would do the taping.” After a flicker of thought, he decided to have the Chinese do all the tape recording, translating and transcribing. Fortuitously, historians have several thousand pages of verbatim texts of Dr. Kissinger’s negotiations with his Chinese counterparts. Paradoxically, behind the scenes, Chinese stenographers prepared verbatim English language typescripts faster than they could translate and type them
More than 30 years ago when I immigrated to the US, applied for citizenship and took the 100-question civics test, the one part of the naturalization process that left the deepest impression on me was one question on the N-400 form, which asked: “Have you ever been a member of, involved in or in any way associated with any communist or totalitarian party anywhere in the world?” Answering “yes” could lead to the rejection of your application. Some people might try their luck and lie, but if exposed, the consequences could be much worse — a person could be fined,
Xiaomi Corp founder Lei Jun (雷軍) on May 22 made a high-profile announcement, giving online viewers a sneak peek at the company’s first 3-nanometer mobile processor — the Xring O1 chip — and saying it is a breakthrough in China’s chip design history. Although Xiaomi might be capable of designing chips, it lacks the ability to manufacture them. No matter how beautifully planned the blueprints are, if they cannot be mass-produced, they are nothing more than drawings on paper. The truth is that China’s chipmaking efforts are still heavily reliant on the free world — particularly on Taiwan Semiconductor Manufacturing
On May 13, the Legislative Yuan passed an amendment to Article 6 of the Nuclear Reactor Facilities Regulation Act (核子反應器設施管制法) that would extend the life of nuclear reactors from 40 to 60 years, thereby providing a legal basis for the extension or reactivation of nuclear power plants. On May 20, Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) legislators used their numerical advantage to pass the TPP caucus’ proposal for a public referendum that would determine whether the Ma-anshan Nuclear Power Plant should resume operations, provided it is deemed safe by the authorities. The Central Election Commission (CEC) has