The Deposit (Garantie de Loyer / Mietkaution)
By law, a landlord can request up to a maximum of 3 months' rent fund as a deposit for a home (in commercial premises there is no limit). This money is never handed over to the landlord.
The money is deposited in a "Rent Guarantee Bank Account" that is in your name, but blocked. It can only be released with the joint signature of the tenant and the landlord after the delivery of the keys or termination of the contract.
Court Insurance (Alternative to depositing capital)
If you do not have 3 months in cash (which could represent 6,000 or 9,000 CHF at a time), there are companies like SwissCaution that act as guarantors. You pay them a non-refundable annual premium (normally 5% of the deposit), and they issue the coverage certificate to the agency as if it were real money.
Defence of your rights: ASLOCA / Mieterverband
The system protects the tenant a lot but can be complex. If your agency tries to charge you with abusive expenses when you leave the apartment or refuses to return the deposit, it is highly recommended to be affiliated with the Swiss Tenant Association (ASLOCA in the French zone, Mieterverband in the German zone) for a small annual fee (approx. 85 CHF). They offer free contract review and judicial support if necessary.