How James addresses this to his audience tells us he considers it an extremely serious matter. His use of "above all" suggests that we should be especially careful on this point. It is as if he is saying, "Make sure you catch this point because it may be the most important one." Swearing oaths is not a trivial matter!
In the Old Testament, taking oaths by God's name was more prevalent—even commanded (see Deuteronomy 6:13)—but God holds those He has called out of this present, evil world to a higher standard. The ancient Israelites were carnal human beings whose behaviors had to be constrained by statute. Knowing they would swear oaths, God directed them to take them honestly and only in His name, thus regulating and elevating the practice.
Christians, though, are to follow God's law, not just in the letter, but also in the spirit, a more in-depth and encompassing charge. The standard that has been set for us is that our word should always be true. Paul writes, "Therefore, putting away lying, 'Let each one of you speak truth with his neighbor,' for we are members of one another" (Ephesians 4:25; see Zechariah 8:16).
Our Savior puts it even more strongly in the form of an admonition: "But I say to you that for every idle word men may speak, they will give account of it in the day of judgment. For by your words you will be justified, and by your words you will be condemned" (Matthew 12:36). Because God is with us, every word that we speak is spoken in God's presence and thus should be true, making oaths unnecessary.
As God's people, we are to represent Him in honesty and obedience and reflect Him in our conduct in every way. Because of this, we do not need God's name in an oath to back up our word. Therefore, a Christian should simply say "yes" or "no" according to what he honestly believes to be true, even in legal matters. As Jesus says, anything we try to add to the unvarnished truth is Satan's handiwork (see John 8:44). In short, a Christian's word should be his bond.