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Banks & Taxes in Switzerland
The Famous Franc: Currency and Payment Options in Switzerland
Expats moving to Switzerland will be happy to know that the Swiss franc is one of the most stable currencies in the world. In our Relocation Guide to Switzerland, we have gathered plenty of information on the currency itself, in addition to providing tips on ways to pay.
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At a Glance:
- The local currency in Switzerland is known as the Swiss franc and is one of the most stable currencies in the world.
- Use of debit cards is on the rise in Switzerland, with contactless and mobile payments making it more convenient — but cash is still preferred.
The Swiss Franc: A Real “Safe Haven”
Switzerland is not part of the European Union and it remains one of the few European countries to not use the euro. Consistently ranked as one of the world’s safest currencies, the Swiss franc is often referred to as a “hard currency” — a currency that is not likely to dramatically lose or gain in value. For foreign investors, the Swiss economy is known as a real “safe haven”.
Up until 1798, roughly 860 different coins of varied values, using different monetary systems, were active in Switzerland. This is because individual cantons, cities, and even abbeys were making their own coins and using their own currency systems.
Between 1798 and 1803, the Helvetic Republic tried to introduce a national currency based on one of the local cantonal currencies — the Berne thaler. However, foreign trade and private banks resulted in only 15% of the money used in 1850 being produced in Switzerland itself, and so the Swiss Federal Constitution of 1848 declared that the only organization allowed to produce money in Switzerland should be the federal government. This was the birth of the Swiss Franc.
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The “Mighty Franc”: Strength and Stability
The Swiss franc has always been considered a safe currency throughout history, and it plays a strong role on the international monetary stage. In times of financial insecurity, the Swiss franc is the currency most often purchased thanks to its famous stability. Used in only Switzerland, Campione d’Italia, and Liechtenstein, the Swiss Franc was ranked as the sixth-most traded currency in 2015 — this just goes to prove its value.
In January 2015, the Swiss National Bank (SNB) abandoned the Swiss franc’s peg to the euro, shocking the rest of Europe and causing the Swiss stock market to fall. The reasons why they abandoned this peg are varied, but one of the main reasons involved the fear of the Swiss franc’s massive overvaluation.
Notes and Coins
The cent (German: Rappen, French: Centime) is the subunit of the Swiss franc and is available in 5 cent, 10 cent, and 20 cent coins, with 1 CHF equaling 100 cents. Half-franc, one franc, two franc, and five franc coins are also available. Unlike many other currencies, all of the Swiss coins are silver, except for the five cent coin, which is gold.
The banknotes in Switzerland include 10 CHF (yellow), 20 CHF (red), 50 CHF (green), 100 CHF (blue), 200 CHF (brown), and 1000 CHF (purple).
In terms of security, there is really no need to panic. The Swiss Franc notes are consistently ranked as some of the most secure banknotes in the world, with the current series having 18 different security features. The Central Banks gave the ratio of counterfeit Swiss banknotes to real bank notes as around 1 in 100,000, compared to 1 in every 10,000 for the US dollar.
Cash vs. Card: A Never-Ending War
Both credit and debit cards are frequently used in Switzerland, but like in most European countries, cash remains king for everyday purchases. Almost all businesses that have a phone line will have a card machine, and contactless payments are becoming more and more popular.
It is not surprising that a nation whose finance industry has remained one of the strongest in the world thanks to its stability and its reputation of banking secrecy, favor the privacy provided by using cash.
International Cards: The Price Is High
If you decide to use your home country bank card while abroad in Switzerland, be prepared for high charges. When withdrawing cash and lodging money into an account, your bank from your home country will most likely charge high fees — as will ATMs in Switzerland. These charges vary as they are normally set by your home bank.
As well as this, many Swiss companies will refuse to pay your wages into a foreign account, so it is much easier if you open a Swiss bank account if you are planning on being in Switzerland for a significant amount of time.
Foreign Exchange: Rush or Wait?
When you move to Switzerland, you will obviously need some cash to get started — but what’s the best way to exchange your money? Using a service specifically designed for currency exchange will often get you a better exchange rate than just lifting money out at an ATM with your home debit card when you arrive in Switzerland.
We recommend that you do your research — talk to other expats and look into exchange rates and service charges. Don’t rush into anything, or you could end up losing money.