Libertarian banking

26 February 2008 By Martin Hutchinson

Liechtenstein has been roundly criticised for its protection of German tax cheats. Martin Hutchinson doesn t think the critics have the moral high ground. He argues that bank secrecy is a civil liberty worth protecting.

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The German secret service bought for $6.2m a stolen list of 750 German owners of Liechtenstein bank accounts; Britain subsequently bought for $200,000 a copy of the list with 100 British such owners.

Swiss banks are believed in 2000 to have had 50,000 dormant accounts owned by nonSwiss people opened before 1945; the banks agreed a $1.85bn settlement in 2000 in respect of those accounts owned by victims of the Holocaust. The principal Swiss banking secrecy law was passed in 1934 in response to pressure from the Nazi regime for names of German account holders; ownership of a Swiss bank account was cause for execution in Germany during that period.

The 16 Liechtenstein banks have approximately $150bn under management, and generate 20% of Liechtenstein's Gross Domestic Product. Additional secrecy is assured in Liechtenstein banks by means of foundations, under a local law of 1926.

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