Some three decades ago, the globalisation of finance took off, leading to worldwide economic integration and an unprecedented growth of cross-border capital flows. However this process did not go hand in hand with harmonising national regulatory systems. National and financial authorities are now looking for measures to repair this, by moving towards a financial level playing field amongst financial institutions and nations, and protecting investors.
Two reasons explain this shifting course. First, five years after the financial crisis, economic recovery appears to have stalled. Second, faced with declining tax revenues and mounting social pressures, most governments have to look for new sources of income.
Many Swiss politicians, managers and voters have long hoped that the advantages of being outside the European Union will outweigh the disadvantages. This proposed directive suggests that the disadvantages of being an outsider are growing. The point here is not if the Markets in Financial Instruments Directive is the best or even a fair initiative. Today Switzerland faces a gradual erosion of its country-specific advantages in its financial marketplace. Being outside the EU means Switzerland has no influence at the regulation drawing table. Lobbying by the Swiss Banking Association is unfortunately not likely to have much effect.