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Low interest rates and high finance
The low cost of obtaining capital has a
beneficial effect on the development of all business activities
and consequently on the overall economy. Switzerland enjoys an
outstanding reputation with foreign investors. Because of this
reputation and the high savings rate, Switzerland has low
interest rates, which in turn reduces overall financial costs.
To finance current business activities, banks grant various
types of short-term credits. During the last five years, the
average spread in the money market and capital market interest
rates in CHF and EUR ranged between 1.5-2%.
Competitive cost of capital, low rate of
inflation
and strong currency
Switzerland has traditionally had a very low rate
of inflation – below one percent in recent years and currently
at 2.8%. The country also has its own, exceedingly stable
currency, the Swiss franc.
 Exchange
Rates
Compared with the rest of the world, the cost of capital in
Switzerland has been remarkably low for years. Thanks to the
high savings rates, interest rates are low as well. The
effective interest rates for borrowed capital range between 2%
and 7%, depending on the customer’s credit rating.
Growing venture capital and IPOs
The number of venture capital firms in
Switzerland has grown rapidly in recent years. The Swiss federal
authorities’ new federal law supports the provision of venture
capital by venture capital firms (VCFs), namely with two kinds
of tax incentives:
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Recognized risk capital
companies are exempt from stamp duty upon start-up and
in the event of a capital increase. They also receive
tax incentives at the federal level. |
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Private individuals – known
as «business angels»
(BAs) – who contribute to the foundation and development
of new companies get federal tax breaks if they grant
subordinated loans from their own private assets for
launching start-ups. |
SECA
– Swiss Private Equity & Corporate Finance Association
EVCA
– European Private Equity and Venture Capital Association
Business
Angels Switzerland
Swiss
Cantonal Banks
The Swiss stock exchange SIX, which is based in Zürich and has a
strong focus on
«Initial Public Offerings»
(IPOs) by technology companies, has also become a magnet
for investment funds involving emerging technologies such as
nanotechnology.
SIX
Swiss Exchange |
