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Regulatory Framework for Banks and Investment Firms in Liechtenstein

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This report provides an overview of the key laws and regulations that govern the banking sector in Liechtenstein, including the Banking Act (BA), the Financial Market Authority (FMA) guidelines, and the Capital Requirements Regulation (CRR).

Overview of Key Laws and Regulations

The primary law governing banks and investment firms in Liechtenstein is the BA. It sets out the rules for licensing, authorization, supervision, and resolution.

Banking Act (BA)

  • Licensing: The BA regulates the licensing process for banks and investment firms.
  • Authorization: The FMA issues licenses to authorized institutions.
  • Supervision: The FMA conducts regular supervision of licensed institutions.
  • Resolution: The BA outlines procedures for resolving financial difficulties.

Financial Market Authority (FMA) Guidelines

  • Risk management: The FMA issues guidelines on risk management practices.
  • Capital adequacy: Institutions must meet strict capital requirements.
  • Liquidity: The FMA ensures that institutions maintain adequate liquidity.

Capital Requirements

Banks and investment firms in Liechtenstein are subject to strict capital requirements, which are set out in the CRR. The FMA conducts regular stress tests to ensure that institutions have sufficient capital to absorb losses.

Key Takeaways

  • Banks and investment firms must meet strict capital requirements.
  • Institutions are subject to regular stress tests by the FMA.

Remuneration Policies

Banks and investment firms must implement remuneration policies consistent with sound risk management practices. The FMA shares information on these policies with European supervision bodies.

Key Takeaways

  • Banks and investment firms must implement sound remuneration policies.
  • The FMA shares information on remuneration policies with European authorities.

Resolution Framework

Liechtenstein has a resolution framework in place, which aims to ensure the continuity of critical functions, protect public funds, and minimize reliance on extraordinary public financial support.

Key Takeaways

  • Liechtenstein’s resolution framework protects public funds.
  • The framework minimizes reliance on extraordinary public financial support.

Specific Fields of Business

The report highlights the importance of specialized regulation in areas such as token and trustworthy technology service providers (e.g., blockchain).

Key Takeaways

  • Specialized regulation is crucial for areas like token and blockchain services.
  • Liechtenstein’s regulatory framework is designed to ensure stability and soundness.

Conclusion

Overall, this report provides a comprehensive overview of the regulatory framework governing banks and investment firms in Liechtenstein. It highlights the importance of specialized regulation in areas such as token and trustworthy technology service providers.