Financial Market Stability Committee of Liechtenstein Addresses Global Economic Uncertainty

Strategic Insights -

The Financial Market Stability Committee (FMC) of Liechtenstein, led by Eve Beck, met on July 7, 2025, for its 25th meeting, focusing on the economic situation and its implications on the country's economy and financial sector. The committee discussed the global economic challenges, high economic policy uncertainty, and increased volatility in international financial markets. Despite these challenges, Liechtenstein's financial center remains stable, and the FMC will continue to monitor developments to ensure financial sector stability.

Key Takeaways:

  • The FMC discussed the weakening economic situation and its potential impact on the Liechtenstein economy and financial sector, noting increased global challenges and high economic policy uncertainty.
  • The committee highlighted increased volatility in international financial markets, with risk premiums for US government bonds rising and the US dollar performing weakly despite its traditional role as a safe haven.
  • Despite these challenges, Liechtenstein's financial center remains stable, with the FMC continuing to monitor developments to ensure financial sector stability.
  • The Financial Market Authority (FMA) reviewed the macroprudential strategy and made minor adjustments to continue complying with regulatory changes.
  • The existing macroprudential strategy will be continued, and the revised strategy will be published on the FMA website.
  • The FMA recommended keeping the countercyclical capital buffer (CCB) at 0% of the total risk exposure due to the current negative credit gap and other macroeconomic indicators.
  • The FMA examined two existing recommendations from the European Systemic Risk Board (ESRB) and their implementation in Liechtenstein, determining that no additional measures are currently necessary for the Liechtenstein banking sector.
  • The FMC will continue to closely monitor developments to ensure the continued stability of the financial sector.
  • Eve Beck, Secretary General of the Ministry of General Affairs and Finance, chaired the first meeting of the FMC in its new composition, following the change of government.

Statistics:

  • The FMC met for its 25th meeting in its new composition following the change of government.
  • Risk premiums for US government bonds have risen due to global economic challenges.
  • The US dollar has performed unusually weakly despite its traditional role as a safe haven in times of crisis.
  • Leverage ratios in the non-financial sector are currently below the long-term trend.
  • The countercyclical capital buffer (CCB) has been maintained at 0% of the total risk exposure due to the current negative credit gap and other macroeconomic indicators.

Sources:

  • "Financial Market Stability Committee of Liechtenstein addresses global economic uncertainty" by Liechtenstein State Administration.
  • "Minutes of the 25th meeting of the Financial Market Stability Committee" by Financial Market Stability Committee.
  • "Financial Stability Committee" by Liechtenstein Financial Market Authority.