A:

The "Gnomes of Zurich" is a euphemism for Swiss bankers. The name is meant as an insult because gnomes, most often found in fairy tales and legends, traditionally are regarded as secretive and greedy. And, Zurich - Switzerland's financial hub - is home to a high number of Swiss banks, which have been accused of secrecy and greed.

The popularity of the term grew in the mid-1960s when the British pound fell in value against foreign currencies. Many Britons blamed Swiss bankers for possessing significant holdings of sterling.

The phrase was made famous during the 1964 Sterling Crisis in Britain when Harold Wilson, a politician in the British Labor Party, referred to Swiss bankers and financial speculators as "Gnomes of Zurich". In his speech to the House of Commons, Wilson blamed Swiss bankers for the decline of the pound on foreign exchange markets, blasting the "Gnomes of Zurich" for harmful speculating practices.

Swiss banks are regarded highly for their rigorous security measures and client discretion. However, it is these secretive practices that contribute to the continued use of the term "Gnomes of Zurich" in reference to Swiss bankers.

For more on this topic, read Elves And Gnomes: A Fairytale World Of Investing.

This question was answered by Richard C. Wilson.

RELATED FAQS
  1. What are elves?

    Elves are used to describe the technical analysts that are guests of the PBS show Wall Street Week. The job of these technical ... Read Answer >>
Related Articles
  1. Trading

    Is The Swiss Franc A Good Investment?

    Individual investors, businesses, financial institutes and even countries have been keeping their money in Swiss francs.
  2. Financial Advisor

    Buying Swiss Francs as a Long-Term Investment: Risks & Rewards

    Learn about the risks and rewards of investing long term in Swiss francs and the history of the Swiss franc's exchange rate against the dollar.
  3. Tech

    Will Bitcoin Become the new "Swiss Bank Account"?

    As Swiss banks become reluctant to open secret accounts for Americans, some of these banks are turning to Bitcoin as a workaround measure.
  4. Investing

    Why The Swiss Franc Is So Strong

    We look at the recent and historic strength of the Swiss franc, as well as recent actions by the Swiss National Bank.
  5. Investing

    Why Swiss Watch Sales are Plummeting (UHRN)

    Sales of Swiss watches have plummeted over the last year due to a broad range of factors
  6. Investing

    This Central Bank Owns U.S. Equities Worth 20% of GDP

    Discover more about Swiss National Bank's holdings of financial assets, and look into its recent accumulation of foreign equities.
  7. Investing

    Switzerland's Biggest Equities ETFs

    Despite challenging times for some Swiss firms, investments in the Swiss stock market are still considered a safe haven and ETFs are an interesting option.
  8. Personal Finance

    What do investment bankers really do?

    Investment bankers are essentially corporate financial advisors who help companies manage the process of raising financing for their activities.
  9. Personal Finance

    What personal bankers do – and how much they make

    Discover the job duties and typical salary of a personal banker, and identify the education and skill set needed to be successful in the field.
  10. Investing

    Brexit: Would the Swiss Model Work?

    Learn how the Swiss model would work for the UK after Brexit.
RELATED TERMS
  1. SIX Swiss Exchange

    Switerzland's primary stock exchange, located in Zurich. The ...
  2. USD/CHF (U.S. Dollar/Swiss Franc)

    The Swiss franc is the safe haven of foreign currencies, and ...
  3. Investment Banker

    An investment banker is an individual who is primarily concerned ...
  4. Banker's Acceptance - BA

    A banker's acceptance (BA) is a short-term debt instrument issued ...
  5. UBS

    UBS (derived from the Union Bank of Switzerland) is a multinational ...
  6. Consumer Bankers Association - CBA

    A U.S. trade organization representing financial institutions ...
Trading Center