INVESTIGATING THE INTEREST-RATE IMPACT OF CHANGING SECRET BANK DEPOSIT LAWS - SWITZERLAND

Banks in many countries are governed by secrecy laws regarding the ban k-customer relationship. Lately, many countries have been pressured to tighten secrecy laws to combat the abuse of bank secrecy by ill-gotte n and criminal money. Switzerland has played a leading role in tighten ing secrecy conditions by passing new secrecy laws, closing loopholes in existing laws, and imposing restrictions on its traditionally indep endent banking industry. The theoretical monetary implications of chan ging secrecy conditions depend largely on banks' behavior regarding th eir deposit rate. This paper uses intervention time series analysis to test the monetary implications by investigating the effects of tighte ning secrecy laws on interest rates using Switzerland as a case study.