Liechtenstein Banking Industry Proves Resilient in Face of Global Uncertainties
Economic Stability Amidst Global Challenges
The Principality of Liechtenstein’s banking industry has demonstrated its ability to withstand economic and political challenges, according to a recent report by Standard & Poor’s (S&P). Despite the uncertain global landscape, Liechtenstein’s banking sector is expected to remain strong due to its robust risk-adjusted capital ratios.
Key Factors Contributing to Stability
- Robust Risk-Adjusted Capital Ratios: S&P praised the banks for prioritizing capitalisation over short-term shareholder returns, providing high confidence among clients and their long-term wealth planning needs.
- Effective Legal Framework: Liechtenstein’s legal framework has been hailed as effective, fair, and predictable by S&P, allowing for an orderly development of laws without sudden changes.
- Efficient Political System: The country’s efficient political system has enabled the introduction of regulatory reforms, such as the law on tokens and trusted technologies for service providers, which took effect in January 2020.
Progress in Anti-Money Laundering and Tax Evasion Prevention
Over the past decade, Liechtenstein has made significant progress in implementing anti-money laundering and tax evasion prevention regulations. The country has developed into a transparent financial centre with an effective system for combating money laundering and terrorist financing (AML/CFT), confirmed by the latest MONEYVAL report published in June 2022.
Strengthening Position through IMF Accession Negotiations
The reclassification of Liechtenstein’s banking sector to Group 2 of the BICRA underscores its resilience and stability. In light of the current global uncertainties, including the ongoing war in Ukraine, this development is a testament to the country’s strong foundation. The Bankers Association views the government’s decision to initiate accession negotiations with the International Monetary Fund (IMF) as an important step in further solidifying Liechtenstein’s position.
Conclusion
Overall, Liechtenstein’s banking industry has proven its ability to navigate challenging times, and the country remains a stable and attractive destination for investors and clients alike.