Good regulation is of the utmost importance for Liechtenstein’s globally oriented financial industry. It ensures a high level of consumer and investor protection and at the same time promotes the stability of the banking and financial centre. Both objectives increase confidence in the banks. However, the standards have practical relevance only if they can be tailored to the different business models and scales. A “one size fits all” approach of global regulatory efforts would be misguided. The costs must also be affordable for smaller institutions with a different risk profile. Only then can they continue to be competitive.
Liechtenstein has modern and EU-compatible financial market regulation
Liechtenstein is a member of the European Economic Area (EEA) and thus has full freedom to provide services in all countries of the European Union (EU) and the EEA (which also includes Norway and Iceland). This means that the same legal framework applies to banks in Liechtenstein as in the EU countries.
Liechtenstein promotes the competitiveness and attractiveness of the financial centre by implementing EU directives quickly and in line with market requirements.
The incorporation of an EU legal act into the EEA Agreement takes place in a structured procedure.
The clients of Liechtenstein banks thus benefit both from internationally recognised financial market regulation such as MiFID and UCITS and from stability-promoting frameworks for banking supervision and their minimum requirements (CRD/Basel III).
Recognised financial market supervision as a central interface of the national economy
The Liechtenstein Financial Market Authority (FMA) is not only the competent micro- and macroprudential supervisory authority for banks and other financial service providers, but also assumes key roles for the Liechtenstein national economy as a regulator and resolution authority. The FMA’s international network is of great importance, since the clients and markets of Liechtenstein banks are primarily located in foreign countries. With a very small home market, the business models of Liechtenstein financial service providers have a very strong cross-border orientation. The FMA is integrated into the European System of Financial Supervision (EBA, ESMA, EIOPA) and the European Systemic Risk Board (ESRB). But because Liechtenstein does not participate in the euro, the banking centre is not integrated into the European banking union.
The FMA is a full member of the International Organization of Securities Commissions (IOSCO) and other global networks. This shows that Liechtenstein, along with its financial centre and supervision, are recognised as equal partners within the international and European community. At the same time, this further strengthens the integration of the financial centre and facilitates the access of Liechtenstein intermediaries to foreign markets.
Close ties to Switzerland
Through the Customs and Currency Treaties, Liechtenstein traditionally has very strong ties with Switzerland. The Swiss franc (CHF) is the country’s official currency. Liechtenstein is a member of the Swiss payment transaction system (SIC). Liechtenstein banks generally enjoy the same legal status as Swiss banks. Swiss legal and administrative provisions concerning monetary, credit, and currency policy within the meaning of the National Bank Act also apply to Liechtenstein. Thanks to the close neighbourly economic relations with Switzerland, Liechtenstein’s financial service providers also benefit from privileged access to the Swiss economic area. For Swiss providers, Liechtenstein serves as a close hub to the EU and EEA member countries.
Collections of laws
Liechtenstein law (English translation of selected legal acts)