Following World War I, Switzerland narrowly avoided territorial changes. In a 1920 referendum, the Austrian state of Vorarlberg overwhelmingly voted to join Switzerland, but the plan was blocked by opposition from Austria, the Allies, and certain Swiss factions. Switzerland instead solidified its relationship with the newly independent Principality of Liechtenstein, signing a monetary and customs union that guaranteed Liechtenstein’s independence.
In 1920, Switzerland joined the League of Nations, balancing international engagement with its policy of neutrality. The Swiss Banking Act of 1934 introduced anonymous numbered accounts, allowing Germans, including persecuted Jews, to protect their assets from Nazi confiscation.
Rising political tensions in Europe during the 1930s prompted Switzerland to rearm and prepare for potential conflict. Defense spending increased, and army training programs were expanded under Federal Councillor Rudolf Minger, who predicted war would break out by 1939. The government promoted food stockpiling and developed a war economy structure.
Switzerland also launched a cultural policy known as Geistige Landesverteidigung ("spiritual national defense") to reinforce national identity and resist fascist influences. In 1938, Romansh was recognized as a national language to counter Italian nationalism, and Swiss German became more widely promoted. The same year, Switzerland withdrew from the League of Nations, reaffirming its traditional neutrality amid growing European instability. These preparations ensured that Switzerland was well-positioned to maintain its neutrality once again during World War II.