By Sindy Schmiegel, Head of Public Relations, Swiss Bankers Association

The world’s political elite meet in Hamburg for the G20 summit this week. Top themes are the state of the global economy, pushing structural reforms and promoting stability and resilience of economies. Opponents of the summit, who view the G20 forum as representing capitalism, hunger and death, will also make themselves known.

However, economic collaboration has in recent decades resulted in an enormous improvement to the quality of life according to the Bank of International Settlements's (BIS) latest annual report. In light of this, would it not make more sense to open the way for the internationalization of the real economy and the financial system, and in doing so, seek to spread prosperity?

Combating Isolationism

A quick look at the news shows that the opposite is happening. In these times of «America first», Brexit and neo-nationalist tendencies in Eastern Europe, protectionism and market fragmentation are gaining ground. Germany's «Der Spiegel» has even identified an «illiberal zeitgeist». The BIS is so alarmed about isolationism that it dedicated an entire chapter of its annual report to defending globalization's achievements.

«The challenge is to make sure that globalization is perceived as such (source of opportunities, rather than as an obstacle, and that those opportunities are turned into reality,» the report says.

«In other words: technological advancement should not and cannot be stopped. The same applies for global economic integration.»

Banking Piecemeal

Switzerland’s financial centre is a good example of the detrimental effects of market fragmentation. Swiss banks are global leaders in cross-border wealth management. Almost one-quarter of all assets held by customers abroad are held in Switzerland.

However, cross-border finance only works if banks have the right to serve customers who are in other countries. EU regulations such as MiFID II, the directive for the harmonization of financial markets in the European single market, have an exclusionary nature versus third countries like Switzerland. Some countries do not even allow potential clients to be reached by phone call from Switzerland if the customer has not specifically asked for it.

This makes it difficult for Swiss banks to serve customers in the most important foreign market. Perhaps not coincidentally, Swiss banks created more jobs last year in the EU than they did in Switzerland.

Surging E-Commerce

Digitization is fueling a surge: thanks to e-commerce, goods can be bought from all corners of the world. Tech giants from the U.S. and China are encroaching into our lives more every day (examples thereof are provided in this equally informative and entertaining presentation by Henri Arslanian), and small and mid-sized firms have unlimited financing options thanks to crowdfunding. In short, economic realities and political will appear to be diverging.

I'd like to ask people who support isolationism if they would be prepared to forgo the progress that is possible in a connected, collaborative world. My preference for openness and internationalization is of course influenced by the fact that I am on the winning side of globalization, at least for now (saying «on the winning side» means I recognize that there are also those less fortunate).

Tearing Down Trade Barriers

However, an illiterate woman in India who also has access to banking services, a Kenyan who runs his local business with the help of his mobile phone, or the cooperative in Peru that is able to sell its clothing around the world will all echo the sentiment. It was only earlier this year that the B7, the G7’s business arm, called for no additional barriers that hinder global trade, in a joint declaration in April.

Unfortunately, the International Monetary Fund's finance committee didn't mention the negative effects of protectionism in its spring meeting statement; perhaps because the proponents of «my country first» had their way.

No More Isolated States

The world long ago stopped consisting of isolated nation states, just as the interconnectedness between the real economy and the financial system cannot be severed. The BIS is right: globalization is a major opportunity. So let’s make the most out of it and not be afraid of the competition out there – because it stopped existing a long time ago.

Switzerland plays an important role here: both as an example of successful economic liberalism and as an influencer in international standard-setting bodies. The G20 summit, where Switzerland is invited as a guest to a finance ministers meeting, provides the next opportunity.