WHAT IS 'Gnomes Of Zurich'

Gnomes of Zurich is a derogatory term used to describe Swiss bankers. The term was coined in 1964 by British Labor party politician George Brown in response to a meeting about a currency crisis that was hurting the British pound, that was seen as being caused by currency manipulation by Swiss banks. The term faded, but came back into use in the early 2010s in response to financial instability in Europe.

BREAKING DOWN 'Gnomes Of Zurich'

Gnomes of Zurich is an insult to Swiss bankers, used by those who think something done by Swiss bankers is harming other currencies or economies. The use of the word "gnomes" is meant to invoke ugly, dirty medieval fairytale gnomes who were obsessed with gold kept underground, and who lived underground to hoard gold, not sanitized modern garden gnomes. The financial center of Switzerland is Zurich, and Swiss banks are known for secrecy, especially of dubious dealings, and for hiding clients' money in underground vaults. These ideas put together in the phrase "gnomes of Zurich" imply that bankers in Switzerland are so obsessed with wealth that they hide underground to hoard it, and are inappropriately secretive about their activities and clients. 

While Swiss bankers have always been seen by the rest of the world as secretive, it wasn't until 1964 that the phrase gnomes of Zurich was coined. Labor party politician George Brown came out of a meeting that discussed the plummeting value of the British pound in the middle of a larger currency crisis he believed was caused by Swiss bankers' manipulations of their own and others' currency, and said, according to BBC News, "The gnomes of Zurich are at work again." The phrase was soon in common usage in the international financial world, but eventually faded to a lesser-used term.

Modern Usage of Gnomes of Zurich

In the wake of the world financial crisis of the late 2000s, the phrase saw a new resurgence in popularity. Multiple countries' economies and currencies were in chaos, and it was as easy to blame the Swiss as anything else. Whether Swiss bankers were manipulating currency or not, or responsible for sub-prime mortgage lending, as some claimed, they were typically secretive, which made them natural targets for blame. In addition, British bankers considered moving to Switzerland where there are fewer regulations than in the United Kingdom, which increased scorn and resentment of Switzerland. As worldwide financial markets improved, Swiss bankers were scrutinized less often, and the phrase again faded from common usage.

RELATED TERMS
  1. Gnomes

    Gnomes were 15-year, fixed-rate, pass-through securities offered ...
  2. Swiss National Bank

    The Swiss National Bank is the central bank of Switzerland and ...
  3. CHF

    In currency markets CHF is the abbreviation for the Swiss franc, ...
  4. SIX Swiss Exchange

    The SIX Swiss Exchange is Switerzland's primary stock exchange, ...
  5. USD/CHF (U.S. Dollar/Swiss Franc) ...

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

    An investment banker is an individual who is primarily concerned ...
Related Articles
  1. Investing

    Elves And Gnomes: Fairy Tale Investment Terms

    What do elves have to do with investing? Meet the fairytale creatures running around Wall Street.
  2. Trading

    Is The Swiss Franc A Good Investment?

    Individual investors, businesses, financial institutions and even countries have been keeping their money in Swiss francs.
  3. Trading

    Why Switzerland Scrapped the Euro

    Why did the Swiss scrap its peg to the Euro and what impact will it have globally?
  4. Investing

    How To Invest In The Swiss Franc

    The Swiss franc is one of the safe havens of the investing world. Learn how invest through ETFs, forex, futures, and binary options.
  5. 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.
  6. Investing

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  7. Personal Finance

    Investment Banker: Job Description & Average Salary

    An investment banker job description which includes what they do in a typical work day, the skills needed to be successful and how they are paid.
  8. Investing

    Brexit: Would the Swiss Model Work?

    Learn how the Swiss model would work for the UK after Brexit.
  9. Investing

    Is Now the Right Time to Invest in the Euro? (DRR)

    The euro has been falling...does that mean it's now a bargain?
RELATED FAQS
  1. What are the Gnomes of Zurich?

    The "Gnomes of Zurich" is a euphemism for Swiss bankers. The name is meant as an insult because gnomes, most often found ... Read Answer >>
  2. Why is Switzerland considered a tax haven?

    Although Switzerland is no longer a place to “hide” money, it still offers the wealthy some benefits for living and keeping ... Read Answer >>
Trading Center