Two years after Qatar gained independence in 1971, the Federal Council of Qatar first established diplomatic relations with Switzerland. This culminated in the establishment of the Qatar embassy in Bern in 2012. Shortly after, the Swiss embassy in Doha was set up.
Earlier this month, the Finance Minister of Switzerland Ueli Maurer visited Qatar to promote and honour the bilateral relations between the countries. During his visit, Maurer spoke about the significance of the new regulations embraced by the Swiss government in the field of blockchain and distributed ledger technology (DLT).
The Gulf Times quoted Maurer saying,
“We are combining the traditional strengths of high productivity, stability and security with new developments such as sustainable finance and fintech innovation with our new financial market policy.”
Switzerland is regulating new technologies to promote fintech innovation
The financial sector, particularly banking, has always been the cornerstone of the Swiss economy. Switzerland is known as the epitome of cross-border wealth management. In fact, the country controls 25% of the global market share in cross border private wealth management. Nearly half of the CHF 7,893 billion (€7,269 billion) assets currently managed by Swiss banks originate abroad.
“Whilst this top ranking is expected to continue in the future, renewed efforts are needed to provide the best possible framework for new technologies and sustainable development in the financial sector, in which Switzerland has high ambitions to be one of the international pioneers.”
One of these new technological areas Maurer referred to is DLT. Last year, the Switzerland Parliament approved new regulations for blockchain and DLT. Part of this new legal framework came into force in February this year, while the remaining provisions will become enforceable next month.
The new law is a blanket act that aims to selectively adapt federal laws to promote Switzerland as a leading centre of innovation in DLT. Key adaptions are being made in the Code of Obligations (CO), the Debt Collection and Bankruptcy Act (DCBA) and the Financial Market Infrastructure Act (FMIA). One of the most important aspects of this law is the creation of “Registered Uncertified Securities,” a new type of digital securities, and a new licence category called ‘DLT Trading Facility.’
“By implementing brand-new state legal regulations for DLT in recent months we took a huge step forward in fostering the innovative ecosystem of cryptocurrencies in our country.”
According to Maurer, the DLT regulation is enabling innovation while mitigating risks like money laundering. In the so-called Crypto Valley in the Zug region, hundreds of startups are taking advantage of these new regulations.
In order to promote fintech innovation, the Swiss lawmakers had also introduced a ‘Fintech license’ for startups in 2019. With this license, fintech companies can accept public deposits of up to a hundred million Swiss francs. This eliminates the need for fintechs to secure a full banking license.
Moreover, in addition to fueling innovation, the Swiss government is also committed to promoting green fintech, a combination of sustainable financial services and digital technology. To that end, the State Secretariat for International Finance (SIF) launched the Green Fintech Network last year.
The aim of the network is to ensure cooperation between SIF and key stakeholders from the Swiss green fintech ecosystem. This includes green fintech companies and associations, risk capital firms, universities of applied sciences, consultancy and law firms. The network presented its first action plan earlier this year.
These strides towards promoting innovation and sustainability helped Switzerland secure the highest ranking by the European Innovation Scoreboard as the most innovative business location in Europe in 2021. The country also received a commendation from the International Monetary Fund (IMF) for its economic and financial policy during COVID-19.
Boosting bilateral relations with Qatar
In less than two years, Qatar and Switzerland will celebrate 50 years of diplomatic relations.
“It is of paramount importance for me as the Finance Minister of Switzerland that not only our government but also our financial centre stakeholders maintain a strong presence in Qatar…These relations stand on a solid foundation, are friendly and constructive.”
Qatar and Switzerland share ever-growing cooperation in diverse fields. For instance, Qatar is one of Switzerland’s most important economic partners in the Middle East North Africa (MENA) region, Maurer said. In 2020, bilateral trade volume between the two nations amounted to QR 5.8 billion (approximately CHF 1.5 billion).
Financial cooperation between the two countries plays an important role in diplomatic relations. Despite the COVID-19 crisis, the decrease in financial sector contribution was relatively low – a fall of only 6.7% compared to 2019.
The two countries also have significant cooperation in the tourism sector. Switzerland remains a prime tourist spot for Qataris and ex-pats. Qatar has also gained prominence in tourism from Switzerland. Additionally, Qatar has invested significantly in the Swiss hotel industry over the years.
Moreover, Swiss startups are also looking to tap into the Qatar market. In February this year, Instimatch Global expanded its presence to Qatar.
“Furthermore, our two countries are cooperating towards protecting the rights of migrant workers, which constitute an important part of the society in both countries. I’m very pleased that Qatar is committed to improving their livelihoods through fair job opportunities, without the threat of exploitation.
For Switzerland and the world at large, security and prosperity in the Gulf region are of major importance. I welcome that relations between Qatar and other states in the Gulf region have recently eased, and I am confident that the increased cooperation between GCC states will further benefit Swiss-Qatari relations.”