How does a relatively small city in a relatively small country become a place where people from around the world are willing to negotiate agreements, resolve disputes, manage wealth, and conduct diplomacy?

The usual answer is Swiss neutrality. But neutrality alone doesn't create trust. Anyone can claim to be neutral. The difficult part is convincing people that you will remain neutral when taking sides becomes advantageous.

That made me think about credibility as a form of institutional capital.

Geneva demonstrates that institutions can create value by limiting their own discretion. An impartial court, a neutral arbitrator, or a trusted jurisdiction becomes useful because people know there are certain things it has committed itself not to do. Those limitations make its behavior more predictable, allowing people with very different interests to cooperate without giving either side control over the rules.

We usually judge institutions by the powers they possess. Geneva suggests that we should also pay attention to the powers they reliably refuse to exercise.

Sometimes an institution becomes stronger by making itself less dangerous.

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