The Swiss government has repeated its policy that Switzerland's tradition of banking secrecy is non-negotiable.
The announcement comes after days of speculation in the Swiss press that the government might be prepared to make concessions on banking secrecy in order to conclude a second set of bilateral agreements with the European Union.
Brussels wants a compromise on banking secrecy to ensure that Switzerland complies with EU legislation on the prosecution of tax evasion and money laundering.
But following a regular meeting of the Swiss cabinet, the government issued a statement reiterating its commitment to banking secrecy.
"The government would like to underline that Swiss banking secrecy is not negotiable," the statement read.
Still confident of a solution
But the government also said it remained hopeful that the negotiations on the second series of bilaterals could be re-started when the two sides meet again in May.
Last week the current round of talks came to a stand still, mainly because of disagreements over banking secrecy
"I'm confident we will reach an agreement," said Annemarie Huber, who is cabinet secretary. "But we need time to discuss it in the government, to discuss how we will reach a solution that is good for Switzerland and good for the European Union."
Finding a solution that will please both sides could prove difficult. The EU has already stated that Switzerland should not expect special treatment when it comes to fiscal legislation.
Meanwhile on the domestic front, the right-wing Swiss People's Party has launched a campaign aimed at enshrining banking secrecy in the Swiss constitution. And the Swiss Bankers' Association has been openly critical of the EU, saying it is trying to "ram its own legislation down the throat of a non-member."
Julian Hottinger, professor of political science at the University of Fribourg, believes the Swiss government must now open a public debate on banking secrecy.
"Just repeating the 'non-negotiable' policy is the government's way of trying to gain time," Hottinger told swissinfo. "They are a bit confused, and they don't have a real strategy, or a plan to present possible alternatives."
Hottinger says this policy vacuum at government level has fuelled the controversy over banking secrecy.
"The feeling we get in Switzerland is that the government knew this issue was on the agenda, and didn't do much to prepare the major political parties," he said.
"We're going to have to get the issue out in the open and look at possible alternatives." Hottinger continued, "We need to see what sort of things the government can do to get the banks to control better money that is being laundered or hidden for tax purposes."
"In the end the Swiss government is going to have to come up with some sort of counter offer that will in some way keep banking secrecy, while still satisfying our European partners.
Hottinger however believes that such a deal would inevitably mean some sort of compromise on banking secrecy.
"I think we will end up with an agreement like Liechtenstein or Luxembourg; a better control of bank accounts, and the way people are trying to evade taxes through them."
"Exactly how it would work remains to be seen, but I think eventually we would get to a point where we have partial banking secrecy, rather than total banking secrecy as exists now in Switzerland."
Out of step with EU
Without an agreement, Switzerland will continue to remain out of step with the European Union when it comes to prosecuting fiscal crime such as tax evasion and money laundering. EU negotiators have made it clear that they want harmonisation of such legislation, even from non-members like Switzerland, in order for non-members to conclude bilateral agreements.
Switzerland's second round of bilateral agreements cover issues such as trade, labour, and taxation. They are a cornerstone of Swiss foreign policy, and are seen as a politically acceptable alternative to full EU membership.
Swiss voters rejected membership of the European Economic Area in 1992, and only last year turned down an initiative aimed at speeding up membership negotiations with the European Union.
However official Swiss government policy remains full EU membership in the long-term.
By Imogen Foulkes and Ramsey Zarifeh