“Gnomes of Zurich” is a somewhat derogatory term sometimes 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, and which was seen as being caused by currency manipulation by Swiss banks.
The term has since faded, but came back into use in the early 2010s in response to financial instability in Europe.
The phrase rose to prominence during the British currency crisis of the 1960s, which was blamed largely on Swiss banking practices.
Since then the term has fallen out of use, although it did see a brief resurgence during the financial instability in Europe following the 2008 financial crisis.
“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” was meant to invoke ugly, dirty medieval fairy-tale gnomes 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 it eventually faded to a lesser-used term.
While gnomes are used to describe Swiss bankers, the origins of gnomes is most likely from German, and not Swiss, folklore.
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 subprime mortgage lending, as some claimed, they have typically been quite 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.