The Swiss foreign ministry says it will not seek to stop the publication of an American book about Holocaust victims' struggle to win reparations.
The government was outraged at the book's cover, which depicted a Swiss flag covered with a swastika made of gold bars.
The foreign ministry said it was abandoning plans to try and prevent publication of "Imperfect Justice", by former US under secretary of state, Stuart Eizenstat, after legal experts advised that it had virtually no chance of success.
Lawyers had been saying as much since the government announced its intention to take the matter to the US courts.
Charles Poncet, a Geneva-based attorney and an American law specialist, said the publishers need only invoke their constitutional right of freedom of speech to squash any attempt at halting publication.
"The American Supreme Court has already ruled on the issue during the Vietnam War," he told Switzerland's "Le Temps" newspaper. "The judges decided it was legal to burn the national flag."
The accuracy of the book was not in question. But in the wake of the government's announcement a vigorous debate ensued over whether it was fair to say that Switzerland was indeed the Nazis' banker, as the cover suggested.
Jean-François Bergier, head of an independent commission set up to probe Switzerland's wartime past, said the cover was "wrong".
"[It] suggests that Switzerland was the Nazis' accomplice during the Second World War," he told Switzerland's "Blick" newspaper. "That isn't just wrong, it's simply outrageous."
"The flag is the symbol of the people, and the people had nothing to do with the actions of the national bank."
Bergier's commission established that the Swiss National Bank was the main processor of Nazi gold.
But Bergier's colleague, Georg Kreis, also a member of the commission, took a different view. "It's clear the cover is referring to Nazi gold," he told the "Tages-Anzeiger". "The fact remains that some Swiss were involved with this trade.
"Rather than worry about the cover of a book nobody has read, we should be concerned that our national bank laundered Nazi gold."
Kreis added that there is no clear separation between the Swiss and their national bank, and that in a democracy, citizens have a responsibility for what goes on. "If something is done in everybody's name, then we all have something to answer for."
For his part, Stuart Eizenstat said he had no intention of offending the Swiss and that he was willing to reconsider the cover for the French and German editions.
But he told the Swiss Broadcasting Corporation that he had nothing to apologise for, since the Swiss National Bank had processed Nazi gold during the war.
The former undersecretary of state was a key player in the negotiations between Swiss banks and Jewish organisations in the late 1990s. Both parties later agreed to a $1.25 billion settlement for owners of dormant Holocaust accounts and their heirs.
swissinfo with agencies
Historians are divided over whether the cover is accurate, given that the Swiss National Bank processed Nazi gold, but much of the population was kept in the dark about the country's dealings with the Third Reich.
The book, entitled "Imperfect Justice", is about the struggle of Holocaust survivors to reclaim their assets.
The author, Stuart Eizenstat, says he is willing to reconsider the cover of the French and German editions.