For a country which has long been regarded as one of Europe's most secretive financial centres, its increasing openness is hard to comprehend. "We are still battling against an outdated image that receives constant reinforcement from movies and spy stories, an image completely out of touch with reality," says Urs Roth, who took over as chief executive of the Swiss Bankers Association (SBA) at the start of the year.

The SBA has set itself the daunting task of changing this perception. It has just published an English version of its annual report for the first time and is dispatching a growing number of bankers to argue Switzerland's case in Washington and Brussels as well as at international organisations such as the Organisation for Economic Co-operation and Development. Such self-promotion is very un-Swiss.

Switzerland is the world capital of private banking for wealthy individuals, a fact recognised by many international banks which are boosting their private banking presence there. It has an estimated 60 per cent share of the European banking market for wealthy individuals who like to do their banking "offshore" and out of sight of their domestic tax authorities.

Unlike most countries which have just one financial centre, Switzerland has four: Geneva, Zurich, Basle and Lugano, plus a number of specialist tax havens, such as Zug and Schwyz. Throw in Liechtenstein, an hour's drive from Zurich, and Campione, a short ferry ride from Lugano, and it helps explain why Switzerland finds it so difficult to shed the "shady money" myths which have stuck to its banking system.

The SBA, in its role as the industry's cheer leader, plans road shows for New York, London, Berlin, Frankfurt, Paris, Madrid and Milan, to drum up support for Switzerland's financial centres. Meanwhile, the SBA's public relations team is quick to pounce on foreign politicians, ranging from British finance minister Gordon Brown to Arnaud Montebourg, the maverick French socialist MP, whenever they point an accusing finger at Switzerland. In the past Swiss bankers would have shrugged their shoulders and kept their heads down.

"Painstaking explanations of our statutory and regulatory frameworks are not enough," says Mr. Roth. Swiss bankers need to be far more active in promoting Switzerland's strengths - its political stability, stable currency, highly skilled work forces, and service quality. "We need to be heard," says Mr. Roth.

The reasons for Switzerland's growing openness are not hard to find. At a political level, pressure for increased transparency in financial services is growing apace. The EU countries are concerned that their citizens are using Swiss bank accounts to evade taxes, whilst the US has made it very clear, following the terrorist attacks of September 11, that it expects unfettered co-operation from foreign governments in tracking down terrorist money flows.

Switzerland has no choice but to co-operate. It has put in place know-your-customer rules and anti-money laundering legislation which are amongst the best in the world. Nevertheless, most foreign governments still cannot understand the Swiss distinction between tax fraud and tax evasion. Switzerland will waive its bank secrecy rules for the former, but not the latter. Sooner or later, most suspect this will have to change.

Swiss banks will not provide information for "fishing expedition" requests for lists of customers from a particular country. However, Swiss officials admit that the requirement for "reasonable suspicion" has had to be relaxed in the search for assets connected with the US terrorist attacks. Swiss bank secrecy is not as water-tight as it once was.

At the commercial level the pressure for growing transparency is just as strong. UBS and Credit Suisse, the two biggest banks, have moved to a new level of quarterly disclosure following their listing on the New York Stock Exchange. Other Swiss financial institutions, conscious of the need to satisfy international investors, are also being forced to reveal far more about themselves.

"For years Swiss companies used to operate on the basis of the less you tell the better it is," says Professor Peter Bckli, a corporate governance expert who sits on the boards of UBS and Nestle.

However, that is changing dramatically as Switzerland's leading banks and companies introduce corporate governance rules which emphasise transparency and accountability. The collapse of Swissair, the country's national airline, has heightened awareness of the urgent need for a Swiss corporate governance code.

The cozy boardroom ties which existed until recently between many of the pillars of the Swiss business and financial establishment are quickly being dismantled. Directors are being recruited for their international experience rather than their rank in the Swiss army.

As the veil of secrecy is stripped away it has revealed what many have always suspected. Switzerland has some very good financial institutions, and some not so good. UBS and Credit Suisse rank amongst Europe's half dozen biggest banks, and Swiss Re, a Triple A rated company, is one of the world's top two reinsurance companies. All three have shown they are capable of holding their own on the world stage, which is what really matters for their long-term success.

By contrast, Zurich Financial Services, formed from the 1997 merger with the financial services arm of BAT Industries, and Vontobel, Zurich's second biggest independent private bank, have found it more difficult adjusting to the increased spotlight now focused on their affairs.

Mistakes can no longer be swept under the carpet.

Nevertheless, Switzerland's financial services industry is in generally robust health, notwithstanding the downturn in the world's financial markets which will dent the profits of most Swiss banks this year. After more than a decade of decline, the number of banks in Switzerland has started to grow again, and bank staff numbers have risen for the second year in a row.

The Swiss economy is in better shape than many of its competitors. Switzerland has the lowest unemployment and interest rates of any European country, one of the world's strongest currencies and a balance of payments surplus which no country can match.

Yet, despite its clean bill of economic health, Switzerland faces a number of challenges, of which the biggest is deciding whether it has a continuing long-term role as a large and independent offshore financial centre in the heart of a Europe operating with a single currency.

There are already tell-tale signs that Switzerland's importance as a financial centre may be on the wane. The share of the Swiss Franc in foreign exchange turnover is declining steadily and the centre of gravity of UBS and Credit Suisse, the country's two biggest banks, is moving to London and New York. Together they employ 151,000 staff, some 90,000 of which are based outside Switzerland.

The Swiss stock exchange has already lost some of its independence by joining forces with the London-based Virt-x to create Europe's first pan-European stock exchange. If one of the big two Swiss banks was to surrender its independence in a European banking merger, then it would deal a serious blow to Switzerland's ambitions as a financial centre. Switzerland, unlike London, does not have the scale of foreign financial institutions which could fill the vacuum.