The Origins of Swiss Numbered Accounts and German Restrictions

By Miika Makela | WBN News Global, WBN News Europe , WBN Finance| Sept 20, 2025 | CANADA

Swiss numbered accounts are among the most famous institutions of international banking, synonymous with secrecy and discretion. While Switzerland codified its reputation with the Federal Banking Act of 1934, the demand for these accounts was driven by a turbulent neighbor: Germany. Between the collapse of the mark in the early 1920s, restrictive monetary laws, and escalating foreign exchange controls in the 1930s, German citizens sought ways to secure their wealth outside the reach of their own state. This article traces the evolution of German capital controls in detail and explains how they helped cement Switzerland’s unique role in global finance.

Swiss Banking Culture Before the 1930s

Privacy was already a hallmark of Swiss banking long before the numbered account. Cantonal banks in the 19th century operated under strong contractual protections, and Swiss neutrality after 1815 made the country a financial safe harbor. By the 1920s, Switzerland was already hosting deposits from elites across Europe. But the structured secrecy of numbered accounts was a direct response to mounting foreign pressure, particularly from Germany in the interwar period.

Germany After World War I: The First Wave of Restrictions (1919–1924)

The Treaty of Versailles (June 1919) saddled Germany with reparations payments of 132 billion gold marks. To prevent capital flight and ensure reparations compliance, the government introduced foreign exchange controls (Devisenbewirtschaftung) almost immediately.

1919: The Reichsbank issued decrees requiring declarations of all foreign assets and prohibiting unauthorized transfers abroad.
August 1920: The Law on the Supervision of Capital Exports criminalized unauthorized export of currency, gold, or securities.
1921–1923: Hyperinflation made enforcement chaotic, but the principle of state control over capital movements became firmly established.

The stabilization of 1924 under the Dawes Plan and the creation of the Reichsmark briefly eased restrictions, but the memory of hyperinflation left Germans distrustful of keeping their wealth at home.

The Late Weimar Years: Tightening Controls (1929–1932)

The onset of the Great Depression in 1929 hit Germany particularly hard, as the economy depended on short-term U.S. loans. When these dried up, capital flight accelerated.

July 1931 – Banking Crisis: Following the failure of major banks such as Danatbank, Chancellor Heinrich Brüning’s government declared bank holidays and froze withdrawals.
July 13, 1931: The Reich government introduced emergency decrees suspending foreign debt payments, leading to the “Standstill Agreements” with creditors.
July 15, 1931: The Reichsbank suspended gold and foreign exchange convertibility, effectively trapping domestic capital.
October 1931: The government created the Reichsfluchtsteuer (Flight Tax). Initially set at 25% of assets, it was designed to penalize those attempting to move capital abroad.

By late 1931, Germans could no longer freely hold foreign currency or deposit abroad without special authorization. These measures signaled to citizens that private wealth was vulnerable to confiscation or erosion.

Nazi Germany and Comprehensive Control (1933–1939)

The arrival of the National Socialist government in January 1933 marked the beginning of a new phase of capital restriction.

February 1933: The Reich Ministry of Economics reaffirmed bans on unreported foreign deposits.
1934: A sweeping set of decrees consolidated all foreign exchange under state control. The Foreign Exchange Ordinance of February 1934 required every citizen and company to declare foreign assets to the Reichsbank. Failure to do so was treated as economic sabotage, punishable by imprisonment.
1936: Hermann Göring’s “Four-Year Plan” placed even stricter controls on foreign reserves to finance rearmament. Exporters were compelled to surrender foreign currency earnings to the state at fixed rates, reducing incentives to earn hard currency legally.
1938: Further decrees expanded the Flight Tax and reinforced reporting requirements. Germans were explicitly warned that failure to declare foreign holdings could result in criminal prosecution.

By the late 1930s, Germany had built one of the most restrictive monetary regimes in Europe, combining capital controls with political policing. Ordinary citizens, professionals, and industrialists alike sought to shield their assets abroad.

Switzerland’s Secrecy Law of 1934: A Perfect Counterweight

While Germany escalated its restrictions, Switzerland offered the opposite: legal reinforcement of confidentiality.

On February 19, 1934, the Swiss Federal Assembly passed the Federal Act on Banks and Savings Banks. Coming into force on March 1, 1935, it included:

Article 47, which made disclosure of client information a criminal offense, punishable by imprisonment and fines.
Introduction of numbered accounts, where clients were known only by codes. Only senior managers could match names to numbers, reducing risk of leaks.

This timing was crucial. Just as Germany criminalized external accounts, Switzerland created an unbreakable shield for depositors. For Germans, the numbered account system was an irresistible tool to evade restrictions.

Chain of Events: Cause and Effect

The German–Swiss dynamic in the 1930s followed a clear pattern:

1919–1924: Reparations lead to the first capital controls → German distrust of domestic banking.
1929–1932: Global Depression and bank failures → emergency decrees (1931), Standstill Agreements, suspension of gold convertibility.
1931: Flight Tax (Reichsfluchtsteuer) imposed → massive incentive to hide wealth abroad.
1933–1936: Nazi decrees centralize foreign exchange under Reich control → criminalization of undeclared foreign deposits.
1934–1935: Switzerland codifies secrecy in the Federal Banking Act → German citizens open numbered accounts in droves.
Late 1930s: Intensification of German surveillance → Switzerland becomes the premier safe haven.

Postwar Legacy

After 1945, the existence of German deposits in Swiss accounts became controversial, with Allied powers seeking restitution of assets linked to the regime. But the legal and institutional framework built in the 1930s remained intact. Swiss numbered accounts, originally crafted to protect depositors from foreign governments, became the cornerstone of the country’s global financial brand.

Conclusion

The origins of Swiss numbered accounts cannot be separated from the sequence of German monetary restrictions. From the reparations era of the early 1920s through the draconian decrees of the 1930s, Germans experienced firsthand how fragile domestic savings could be under political and economic stress. Switzerland’s legal codification of secrecy in 1934 provided the perfect counterweight.

The cause-and-effect chain is clear: Germany’s ever-tightening capital controls directly fueled Swiss innovation in secrecy. What began as a response to one nation’s crisis evolved into a defining feature of international finance, shaping debates on secrecy, taxation, and capital mobility for generations.

Miika Makela, CFA

LinkedIn: http://bit.ly/46shFb1

#Swiss Banking #Numbered Accounts #Financial History #Weimar Germany #Capital Flight #Banking Secrecy #Monetary Policy #Wealth Management #Historical Finance

Editor for WBN: Chris Sturges

Subscription to WBN and being a Contributor is Free.