29 Oct Interview with Simon Tribelhorn, Chairman and Nicole Bays, Managing Director, Liechtenstein Finance
What factors allow Liechtenstein to maintain its high level of economic stability?
BAYS: Liechtenstein’s financial center thrives on the country’s exceptional stability — an asset that cannot be taken for granted today. This stability encompasses a strong social, political and economic environment bolstered by a highly industrialized economy. Rather than relying on a single sector, Liechtenstein boasts a robust financial center alongside a diverse industrial base, with over 5,000 companies relative to its size. Its small domestic market focused on international clients benefits greatly from its membership in the European Economic Area (EEA) and the customs union with Switzerland. Liechtenstein is in a unique position of having free market access to two economic areas, which also applies to financial service providers.
Due to its EEA membership, Liechtenstein is also compatible with the EU financial market regulation. This means that financial market participants in Liechtenstein are subject to the same legal framework as their counterparts in EU countries. Liechtenstein is often compared to Switzerland. Both countries are well known for their triple-A ratings and high-quality financial centers. However, Liechtenstein’s membership in the EEA represents a significant difference, as Switzerland is not a member and therefore has no free market access.
Additionally, Liechtenstein’s central location in Europe makes it an attractive employer for people from Switzerland, Germany and Austria. With more jobs than residents, we rely heavily on an external workforce. Our diverse job offerings span various business areas, not just the financial sector but also industry. This tradition in finance, combined with our focus on international clients due to a small domestic market, enhances Liechtenstein’s appeal as an employer. Local businesses can leverage high expertise while having opportunities to work with international clients and in global branches. Our university specializes in financial topics and innovative research and supports the workforce by ensuring we have the skills necessary for the future.
TRIBELHORN: As a Swiss national and commuter for the past 20 years, I have always found the banking association’s international environment compelling. Working for another association in Switzerland would not provide the same level of integration into the European market where many important issues are being discussed. Our recent membership with the International Monetary Fund further enhances our stability and creates a dynamic and international workforce that attracts talent from abroad.
Why is Liechtenstein an attractive destination for foreign direct investment?
BAYS: Stability and security are top concerns today, as people want assurances that their money is safe for future generations. Liechtenstein serves as a safe haven with a triple-A credit rating — an increasingly important factor for international investors. We offer a wide range of expertise and quality services in asset preservation and international wealth management supported by a long and deep tradition. Our nimbleness allows us to adapt quickly; all players know each other, and we can efficiently address specific client needs by bringing the right professionals on board.
The Liechtenstein financial center is broadly diversified. In addition to the banks, which are among the best capitalized in the world, it is also worth mentioning that Liechtenstein is rapidly emerging as a leading domicile for tailored solutions or so-called private label funds. Furthermore, Liechtenstein was named the top philanthropy location by the Global Philanthropy Environment Index at the University of Indianapolis in 2022. The country provides a supportive environment for foundations and features liberal laws that help individuals define their purpose and structure. Despite Liechtenstein being a small country, it has a great deal to offer.
How advanced is Liechtenstein in terms of introducing new legislation geared towards new disruptive technologies?
TRIBELHORN: Liechtenstein took a pioneering role with the Blockchain Act, introducing the first free-flowing blockchain law on January 1, 2020. This positioned the country to lead in the digital asset space and allowed the government and the Financial Market Authority to gain valuable experience with new market participants. With the Markets in Crypto-Assets (MiCA) regulations coming into effect next year, the previous blockchain law that was limited to Liechtenstein will now enable established market players to passport their services across Europe. This will create a significant advantage for Liechtenstein as a gateway to Europe. We expect that many new participants will arrive and plan to leverage their experience to grow. For example, a US entity seeking registration can benefit from these regulations by applying for a MiCA license to enable them to serve clients throughout Europe. We have already seen strong interest from both potential new entrants and existing participants.
BAYS: Liechtenstein’s openness to new technologies is noteworthy. Over a decade ago, the government established an office for financial market innovation and digitization. Being the first to introduce a blockchain law highlights the country’s willingness to lead in this area and creates a legal foundation for a token economy. It is remarkable for such a small nation to take the lead on such a significant topic. Liechtenstein also serves as a role model for other countries, with our experts frequently invited to share insights on our blockchain law globally.
How crucial is sustainable finance for Liechtenstein’s banking industry in 2024?
TRIBELHORN: Sustainability is crucial not only in the banking sector but across the entire financial ecosystem, including banks, insurance companies and asset managers. We regularly discuss sustainable finance as an association; it is a key pillar of our strategy. Three years ago, the government issued a comprehensive strategy that highlighted sustainability as a priority. This commitment aligns with the Paris Agreement and the United Nations’ Sustainable Development Goals. Organizations like the SDG Alliance Liechtenstein emphasize our responsibility to future generations. There has been significant growth in sustainable investment funds, which reflects our aim to lead in this area. The financial sector plays an essential role in directing financial flows that impact small and medium-sized enterprises and the broader industrial sector. Ultimately, we must cultivate a mindset that prioritizes our world’s future and our responsibilities to the next generation.
What is Liechtenstein Finance’s role and mission in 2024?
BAYS: Liechtenstein Finance serves as an umbrella organization. It was founded five years ago by the government and all financial center associations. The group encompasses 12 members that represent various sectors. Our mission is to promote the strengths and services of the entire financial center. We currently focus on German-speaking countries and want to gradually build our presence. We showcase Liechtenstein through key events, media outreach and online activities, highlighting our stable environment and unique access to both the Swiss and European markets. Many are unaware of Liechtenstein’s unique advantages such as our dual access to key international markets that make us an ideal gateway for other nations and companies.
Our primary goal is to educate and raise awareness about what we offer. We receive significant feedback from our member associations and their members. Many have noted a shift in mindset in Germany in terms of reduced prejudices. This change is not solely due to Liechtenstein Finance; it reflects the collaborative efforts of the government, associations and financial institutions. Our strength lies in our ability to represent the entire financial center, not just banks or insurance companies. As a government-funded organization, we serve as ambassadors for both the country and the financial center. While we are a small organization that has only been around for a few years, we sense a growing dynamism and openness regarding our efforts.
What major challenges does Liechtenstein’s financial services sector face in 2024?
BAYS: We currently have more opportunities than challenges, particularly due to the geopolitical situation with people and businesses seeking stability and security. We must continue promoting what the Liechtenstein financial center offers. This is a great time for us to demonstrate our stable environment that is supported by a debt-free status, a secure legal industry and a reliable political system. We need to continue expanding our network by sharing positive messages and telling our stories. One key feature of Liechtenstein is its willingness to engage internationally. As a member of various organizations, including the International Monetary Fund, we are committed to shaping a positive future. Small countries like Liechtenstein deserve recognition for their achievements, and it is our responsibility to promote them.