For Switzerland, these are the best of times, and the worst of times. The best, because in an era when a currency’s strength is even more potent a symbol of national virility than an aircraft carrier, the Swiss franc has left its counterparts scrambling for cover.

The franc’s latest ascent, after appreciating steadily for months, has sent even seasoned foreign exchange traders into a spin. This week, the franc almost reached parity with the euro, having long broken through that barrier against the dollar. At just SFr0.75, American tourists in Zurich can’t even afford a pack of chewing gum with their greenback.

No other haven currencies – even those such as the Australian dollar that are commodity driven – have matched this stellar rise. But while an icon of financial virtue, the soaring franc has brought bucketloads of problems. The Swiss National Bank has sought vainly to bring down the currency, exporters have howled, and economists warn of a looming downturn.

While the currency spotlights one aspect of Switzerland’s mixed fortunes, private banking – that quintessentially Swiss business – highlights another. This week Bern and Berlin agreed to regularise previously undeclared and untaxed German bank accounts and reinforce Switzerland’s agonising but essential transition from pariah tax haven to transparent wealth management centre.

The deal with Germany, likely to be replicated soon in an agreement with the UK, marks a victory for Switzerland in avoiding the nightmare of a Europe-wide automatic tax exchange mechanism – in theory still the aim of the European Union.

Instead, by cutting deals with two of the EU’s biggest members, the Swiss have acknowledged traditional bank secrecy is over while still ensuring themselves a future, provided enough rich foreigners can be persuaded to keep their assets in Switzerland once their income and capital gains are taxed.

The chances are not bad: Liechtenstein, which struck a similar deal with London a couple of years ago, this week revealed about 1,500 UK account holders had declared their holdings so far. The authorities claimed that was significantly more than expected, especially given the deadline was not until 2015. In an Italian tax amnesty last year, the overwhelming majority of clients with large Swiss accounts decided to keep their money in Switzerland.

The appeal to the Swiss of the latest deals is that they allow at least the pretence of bank secrecy, in that client confidentiality will be maintained. Under the system, Swiss banks will levy tax on accounts on behalf of the foreign capitals and transfer the proceeds to Berlin and London, without disclosing the beneficial owners. Better still for the Swiss, Berlin says it will stop its bothersome habit of buying stolen client data – a controversial tactic that proved remarkably effective in concentrating Swiss minds.

If Switzerland plays its cards right, its private banks could eventually enjoy a new lease of life. For that to happen, of course, they would have to offer not just the smooth service that has been their hallmark, but genuinely competitive investment performance, which has often been less characteristic.

But while it may have been the best of weeks for private banking, it may also have been the worst. No one knows how much German money is stashed in Switzerland – some estimates say €150bn – let alone how much of it is undeclared. But, in German-speaking Switzerland at least, German clients are a key business.

With the one-off levy on regularising “legacy” assets ranging up to 34 per cent, some money is bound to drain away to Singapore, Panama or elsewhere. Likewise, banks’ profit margins on the money that remains will be significantly lower. Not only are clients likely to become more critical of investment performance, they will resent high fees. The banks will also have the cost of investing in technology to run the new tax assessment programmes.

But while the bilateral tax agreement with Berlin and that pending with London may be bittersweet for the Swiss, what’s cooking with the US is unquestionably less flavoursome.

More than three years after launching a probe into whether UBS bankers helped rich Americans evade tax via undeclared offshore accounts, the US has gained a plethora of information, both from the bank and the thousands of US taxpayers who have come clean under a voluntary disclosure programme. The investigations have branched out, and now involve numerous other Swiss banks. Credit Suisse acknowledged last month it was under investigation; more will follow. So while Berlin and London may have been willing to strike deals with Bern over bank secrecy, Washington looks much less compliant.

Haig Simonian is the FT’s Switzerland correspondent

Haig.Simonian@ft.com

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