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to enact change in European states and f orced them into tax cooperation (Hakel-
berg 2015; Helleiner 2002). It also serves to show the extraordinarily wide d iscre-
tion of prosecutors in the US legal system to e xtend their jurisdiction extraterrito-
rially. While the academic literature on extraterritoriality is relatively new, it is an
important means by which powerful states a ssert c ontrol over economic a ctivity
that has escaped their national regulatory regimes. To our knowledge this is the
first paper to examine how extraterritoriality was used to force one sovereign state
to change its regulations despite sta unch opposition, although paper three c ontin-
ues this theme.
Specifically, international banks have a structural economic dependence on US
markets and the US dollar, which enables US author iti es to re-embed international
finance by extending the boundaries of US regulatory bodies’ j ur isdic tion and in-
fringe on the sovereignty of other states. In this way, powerful sta tes play a central
role in global governance (Krasner 1976; Drezner 2007) and paper two highlights
that instea d of undermining their state capacity as predicted by global iza tion schol-
ars (Strange 1996) , growing economic interdependence may actually endow the
most powerful stat es with additional means of exercising power on less powerful
ones.
We show that after several decades of successful Swiss resistance and multiple
failed US attempts at influencing its secrecy regulations starting in the 1920s , the
US managed to overcom e the limitations of sovereignty and forced Switzerland to
soften its regulations. We argue that in the conflict over banking secrecy, the key
agents of change were US law enforcement authorities who managed to coerce the
transformation of Swiss financial practices and regulations agai nst the will of Swit-
zerland’s governm ent and financial sector. Specifically, they were forced to com-
ply with FATCA or else lose US market access, which would have had dire con-
sequences.
