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Financial Supervision in Liechtenstein: A Unique Balance between EU Harmonization and National Autonomy

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In the midst of a rapidly changing global financial landscape, Liechtenstein’s Financial Market Authority (FMA) has established itself as a trusted and respected supervisory authority, balancing the need for EU harmonization with national autonomy.

Supervisory Authorities and Financial Intermediaries

  • In contrast to EU member states, where the European Central Bank (ECB) and national supervisory authorities have primary responsibility for supervising financial institutions, the EFTA Surveillance Authority (ESA) is responsible for supervising financial intermediaries based in EEA/EFTA States.
  • The ESA’s competence extends to adopting non-binding measures against both national supervisory authorities and financial intermediaries.

Macro-Prudential Oversight and International Cooperation

  • The European Systemic Risk Board (ESRB) plays a critical role in monitoring systemic risks and issuing warnings and recommendations. While Liechtenstein participates in the ESRB’s work, it has not conferred any competence on the ESRB to set binding measures.
  • Globally, the FMA is a member of key international supervisory bodies, including:
    • International Organization of Securities Commissions (IOSCO)
    • International Association of Insurance Supervisors (IAIS)
    • International Organisation of Pension Supervisors (IOPS)
  • Bilaterally, the FMA maintains close relations with foreign partner authorities, particularly Switzerland.

EU Compatibility and Single Market Access

  • As an EEA member, Liechtenstein is obliged to transpose all EU legal acts in the field of financial services into national law. This ensures that Liechtenstein’s financial institutions have direct access to the EEA internal market, benefiting from the EU passport system.
  • The FMA’s membership in European Financial Supervisory Authorities (EBA, EIOPA, and ESMA) underscores its commitment to international cooperation and compliance.

Conclusion

In conclusion, Liechtenstein’s financial sector is a significant contributor to the country’s economy, with the FMA playing a crucial role in ensuring regulatory oversight and maintaining international standards. By balancing EU harmonization with national autonomy, Liechtenstein has established itself as a trusted and respected player in the global financial landscape.

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