Legacy for the financial centre

From five per cent to the Consumer Credit Act

The line from the sixteenth-century rate ceiling to the present runs through several stages. After 1800 the cantons initially kept the old usury rules and the 5 per cent maximum. Once freedom of trade was established, the restrictions were abolished. From 1846 cantons founded public mortgage banks to finance agriculture. In the late nineteenth century the influence of German jurisprudence introduced the modern concept of usury into the Swiss Code of Obligations, notably through Article 21 on the exploitation of a party’s distress, inexperience or improvidence. The Civil Code (Article 795) empowered the cantons to set maximum rates for claims secured by land charges, a power that only a few cantons still used by the early twenty-first century.¹ The Swiss Criminal Code of 1937 made it an offence to exploit another person’s distress to obtain usurious advantages, with heavier penalties for those who practised usury professionally.²

For consumer credit, cantonal law long set the maximum rates on the basis of Article 73 paragraph 2 of the Code of Obligations, which reserves the suppression of abuses in the field of interest to public law. According to the Federal Office of Justice, several cantons had maximum rates of 15 per cent before 2003. Some, relying on the intercantonal concordate of 8 October 1957 on measures to combat abuses in interest, even set the maximum at 18 per cent. The Federal Act on Consumer Credit of 23 March 2001 (Konsumkreditgesetz, KKG), in force since 2003, unified the regime.³ Article 14 empowers the Federal Council to set the maximum permissible interest rate, taking into account the rates relevant for refinancing consumer credit, and provides that the maximum rate should as a rule not exceed 15 per cent.⁴

In 2015 the Federal Department of Justice and Police proposed a mechanism linking the maximum rate to money-market rates, with a range of 10 to 15 per cent.⁵ The current mechanism takes the three-month compounded SARON as the reference rate and adds a fixed margin of 10 percentage points for cash loans and 12 percentage points for overdraft credit, including credit cards, the result being rounded to a whole number. With the SARON practically at zero in the summer of 2025, the ceilings fell on 1 January 2026 from 11 to 10 per cent for cash loans and from 13 to 12 per cent for overdrafts. Contracts exceeding the maximum are void, leaving the consumer owing only the principal.⁶

The modern rules differ profoundly from their sixteenth-century predecessors. They apply to consumer credit only, leaving commercial lending and mortgage lending largely free of rate ceilings. The maximum, moreover, is set by a formula tied to market rates. Yet the underlying logic is recognisably the one formulated by Zwingli and Bullinger. Credit for consumption, the category the Reformers regarded as most exposed to exploitation, is subject to public limits, which the state sets beyond the bargaining of lender and borrower. Where a lender exceeds them, the sanction is the loss of his claim to interest. The requirement that lenders assess the borrower’s creditworthiness before granting consumer credit, in order to avoid over-indebtedness, echoes the Reformed concern that credit should not become a trap for the poor.⁷

Moderate interest and the Zinsinsel

A second line of continuity concerns the level of interest rates. After 1950 Switzerland became, by international comparison, a low-interest country, the so-called Zinsinsel Schweiz. The Historical Dictionary lists the factors: a high propensity to save, low fiscal ratios, a strong banking system, the success of the Swiss National Bank in controlling inflation, expectations of an appreciating franc, and political and economic stability that attracted foreign investors willing to accept lower returns. To counter excessive inflows of capital, the authorities even imposed negative interest on foreign deposits in 1964–66 and 1971–79.⁸

Because the causes of the Swiss low-interest environment of the twentieth century are macroeconomic and institutional, a direct line to the Reformation would be an overstatement. But several of the factors named by the Historical Dictionary, a high propensity to save, fiscal restraint and a preference for stability, are also the virtues that the Zurich morals mandates sought to cultivate. The Reformed ethic of frugality helped to form a society in which saving was honoured, debt was a matter of reputation, and public finances were managed with caution. Mortgage lending, which represents more than two-thirds of Swiss bank lending to customers, is the modern heir of the Gült: credit secured on land at moderate rates, the dominant form of lending in the Swiss economy then as now.⁹ The Schuldbrief, the Swiss mortgage note that developed from the early modern land charge, still structures Swiss mortgage practice (see Part A).

Moral limits and reputation

The third line of continuity is the most elusive and perhaps the most important. The Zurich Reformation embedded economic activity in a framework of moral expectations enforced partly by law and partly by reputation. The modern financial centre operates in a comparable framework, although the content of the expectations has changed. Banks and asset managers are subject to extensive regulation, but they also depend on a reputation for integrity that no regulation can fully secure. The experience of the Swiss financial centre in recent decades, from the controversies over dormant assets and banking secrecy to the collapse of Credit Suisse in 2023, has shown how quickly reputation can be lost and how expensive it is to rebuild.¹⁰

In the author’s practice, clients from Asia and elsewhere frequently expressed an expectation that Swiss institutions would combine commercial skill with a certain moral seriousness: that they would obey the rules and also refuse business that was lawful yet unseemly. That expectation, whether or not it is always met, has deep roots. It reflects a tradition in which the lender was expected to consider the circumstances of the borrower, the magistrate was expected to set limits and the community watched over the conduct of its members. Zwingli’s distinction between divine and human righteousness offers a surprisingly modern vocabulary for this double standard. Human righteousness is the law, which must be obeyed and which sets minimum standards. Divine righteousness is the higher demand, which no institution fully meets but which shapes conscience, judgement and, ultimately, reputation.

A comparison with Geneva, treated in Chapter B.IV, shows that the two Reformed cities developed similar doctrines but different financial profiles. Geneva became a centre of international private banking linked to the French monarchy and later to international organisations. Zurich, for its part, became a centre of commercial and industrial finance, of insurance and of large universal banks. In both, the moderate doctrine of interest and the ethic of stewardship provided a common foundation of trust.

Notes

1. Dubler, “Zinsen”, HLS (as cited above), section “Zinssätze”, naming Appenzell Innerrhoden, Neuchâtel, Ticino and Nidwalden. ↩
2. Gilomen and Dubler, “Usura”, DSS (as cited above). ↩
3. Bundesgesetz über den Konsumkredit (KKG) of 23 March 2001, SR 221.214.1, in force since 1 January 2003; see Kanton Schwyz, “Merkblatt zum Bundesgesetz über den Konsumkredit (KKG) vom 23. März 2001”, https://www.sz.ch/public/upload/assets/8441/Merkblatt_zum_Bundesgesetz_ueber_den_Konsumkredit_KKG_vom_23_Maerz_2001.pdf. ↩
4. Bundesamt für Justiz, “Erläuterungen zur Anpassung von Artikel 1 VKKG”, December 2015, section 1, https://www.newsd.admin.ch/newsd/message/attachments/80605.pdf, which also records the earlier cantonal maxima of 15 and 18 per cent and quotes Article 14 KKG; see also WEKA, “KKG: Das Konsumkreditgesetz”, https://www.weka.ch/themen/finanzen-controlling/finanzmanagement/finanzierung/article/kkg-das-konsumkreditgesetz/. ↩
5. Bundesamt für Justiz, “Erläuterungen zur Anpassung von Artikel 1 VKKG” (as cited above). ↩
6. EJPD, press release of 31 October 2025 (as cited above). ↩
7. WEKA, “KKG: Das Konsumkreditgesetz” (as cited above), on the creditworthiness check. ↩
8. Dubler, “Zinsen”, HLS (as cited above). ↩
9. Dubler, “Zinsen”, HLS (as cited above), section “Geldanlage im Bann der Globalisierung”. ↩
10. On the reputational crises of the Swiss financial centre, including the dormant accounts controversy of the 1990s and the end of banking secrecy for foreign clients after 2009, see the later chapters of this volume. On the takeover of Credit Suisse by UBS, see Federal Council, “Safeguarding financial market stability: Federal Council welcomes and supports UBS takeover of Credit Suisse”, media release of 19 March 2023, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-93793.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.