The Covid 19 has taught us that safe havens are essential

7 April 2020

During this unprecedented crisis and global market meltdown, there is one thing that we have learned: there is a dire need for security through trouble times. We all remember elders telling us to always keep a portion of our assets in a safe haven. That’s because they had experienced their own share of calamities such as world wars. They knew that governments, or economic downturn could make assets disappear in the blink of an eye, and that despair would be the only thing we are left with. Unfortunately, younger generations tend to forget lessons of the past… until this month of March 2020 saw their world be turned upside down.

Be it a virus, a war or a geomagnetic storm, Black Swans, as rare as they come, will keep on occurring.

While the figures of Covid-19 fatalities seem to be decreasing in countries which have adopted rapid action, make no mistake, this crisis is here to last. Three days ago, IMF’s director Kristalina Georgieva warned the economic fallout from coronavirus is already “way worse than the global financial crisis of 2008.”. The domino effect of what has been the most brutal market crash in recent history will have ramifications that go much further than just a temporary recession. In the coming months, number of financial institutions and hedge funds, which ironically, were not hedged adequately, will have to file for bankruptcy. Unemployment has risen at an unheard pace. This also means that people will not meet their mortgage payment requirements… does it sound like a déjà vu? It is true that some industries, such as online retailers and supermarkets will profit from this situation, however the large majority of sectors will be negatively impacted, thus sending the world into a lasting recession.

On the top of this, with the expected crisis widening everyone is watching with apprehension and wondering how other poorer countries will deal with this pandemic, especially India and African countries which have been seemingly more or less spared until now; at the same time, uncertainties about a possible 2nd and 3rd waves in already-affected countries are also adding to the concerns.

The reality is that we are in unchartered territory and not even the best analysts can give an estimate of how much this series of events will economically hurt us. We only know for sure that it will hurt us quite badly and that we should protect our assets.

At SFM, we have always done our best to help our clients secure their assets in different jurisdictions. Switzerland, where our company was incepted, is a jurisdiction that we recommend more than ever.

Other than being in the world’s top 3 countries of GDP per capita, Switzerland has a lot to boast about in terms of safety in these uncertain times:

  • During this pandemic, Switzerland was the country which acted the fastest in releasing funds to domestic companies. A first tranche of 20 billion was released in an emergency fund and Swiss companies started to have access to these funds as fast as 30 minutes after applying online! A one-page form which could be submitted online would grant swiss companies a loan of up to 10% of their turnover, almost no questions asked.
  • The corporate tax rate is one of the lowest in Europe, standing at around 13%.
  • Swiss banks are subject to some of the highest capital reserves requirements the world.
  • The Swiss government offers unparalleled guarantees on funds deposited within Switzerland in case of a bank’s insolvency.
  • Switzerland is regarded as one of the most reputable jurisdictions and fulfils OECD substance requirements.

Thanks to this extreme efficiency model, the country is today what comes closest to safety. And that’s precisely why the swiss franc has appreciated so much in this turbulent time, to the point that the Swiss National Bank had to massively intervene to bring it to a lower level, so as to keep swiss exporters happy. There is much more to Switzerland and we recommend watching our video that we posted not so long ago (here). Should you be interested to setup your company and bank account in Switzerland, please contact us!

We wish everyone safety and health in this crisis and would like to remind that SFM is still open for business as usual, in our different offices.

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