August is usually a month for holidays but bankers at UBS haven’t been relaxing by the beach or golf course. A bruising tax row with a distinctly aggressive US Internal Revenue Service has seen to that.

August is usually a month for holidays but bankers at UBS haven’t been relaxing by the beach or golf course. A bruising tax row with a distinctly aggressive US Internal Revenue Service has seen to that.

I think that the agreement a few days ago by the Swiss and US governments to let UBS transfer details on 4,450 accounts to resolve a bruising legal case is surely a sharp erosion of bank secrecy. It also begs the question of whether the US has landed a serious blow against Swiss national sovereignty, or at least treated Swiss law in a high-handed manner.

And recent events are also an important victory for the taxman, which is even more significant as tax rates are likely to rise as around the world to fill depleted coffers.

Assurances by Swiss government officials will not silence worries that secrecy is at risk. There is now, I am told, real anger in the Swiss banking community. Of course, it is understandable that the Swiss government, mindful that about 13 per cent of Swiss gross domestic product is generated by banking, wants to put the best possible spin on what has happened but such efforts are likely to prove an uphill struggle.

The stakes are huge: Switzerland alone accounts for about a third of the world’s offshore assets. Numbers are, by definition, vague, but some estimates say a total of $11.5 trillion of money is parked in offshore jurisdictions. Losing even a small slice of that money would be a serious blow.

UBS, for sure, must be relieved that it has not had to hand over an even bigger chunk of information and can start to put this saga behind it. (However, UBS’s statement on 19 August, which contains a teasing reference to “remaining accounts”, leaves open some uncertainty over whether more client accounts might be disclosed.) It is, of course, some consolation that UBS has not had to transfer as many as 52,000 account details.

To judge the seriousness of what has happened, an obvious point is that rival financial centres will have been keen to stress their attractions: we can be sure, for example, that Singapore, with its permanent resident status offering to overseas wealthy investors, will be keen to promote itself. The agreement will also remind other banks, not just in Switzerland, of how some governments will take any steps they think necessary short of  war. Consider, for example, how the UK and German governments have felt it acceptable to use data stolen from a Liechtenstein bank, LGT. While lawyers writing for this publication have argued that it is legally permissible to do what the UK authorities have done, it hardly smacks of a high regard for the rule of law to use stolen information. And let's not forget that the UK government recently used anti-terrorism powers to deal with the affairs of an Icelandic bank.

Governments have little use at present for diplomatic niceties as they are riding a wave of anger, both real and exaggerated, about tax havens. While this may encourage greater openness and arguably make the world’s financial system more transparent, the loss of bank secrecy could also be a retrograde step even for those who have no desire to evade tax.

It could be argued that havens have been a general force for good by making it much harder for high-taxing, high-spending governments to operate because people can flee or put money offshore. Tax havens have, in this globalised world, made it necessary for governments, both free market or socialist, to keep their tax rates down to encourage investment. But governments, especially those of a high-taxing bent, are fighting back and trying to set up a kind of global tax cartel. Eroding bank secrecy, therefore, helps to build such a cartel by hampering individuals in shopping around for the lowest tax locations. Bank secrecy, while it has sometimes a refuge for dodgy dealing, has also been a protection for politically oppressed groups trying to put their money out of harm's way, an entirely justifiable use of bank privacy, I would have thought.

In any event, it seems reasonable to assume that bank secrecy in Switzerland, which dates back to the Middle Ages, is eroding. Some wealth management professionals share my view that secrecy is on the way out. A recent online poll of WealthBriefing readers found that almost 50 per cent of respondents said the days of Swiss banking secrecy are numbered, compared to just over a third (35 per cent) who believe that they are not, and the remaining 15 per cent who think its too early to tell.

Those poll respondents are right to be worried. Even within Switzerland, as this publication has reported, political leaders are debating issues such as whether the country can any longer finesse the issue by claiming there is a distinction between tax evasion and tax fraud. Fraud is a crime that enables foreign authorities to request Swiss banking data, whereas tax evasion – a crime in the UK, for example – is not.

So the question may now be what the Swiss public, a famously independent-minded people, decide to do.The UBS case is not just about the fine details of specific accounts - it raises issues about economic liberty, privacy and respect for national sovereignty. That is why the after-shocks of this case are likely to last for some time to come.