The FMA Liechtenstein is integrated into the European System of Financial Supervision. It consists of the European Systemic Risk Board (ESRB) and the three European supervisory authorities: the European Banking Authority (EBA) headquartered in Paris, the European Insurance and Occupational Pensions Authority (EIOPA) headquartered in Frankfurt, and the European Securities and Markets Authority (ESMA) headquartered in Paris.
The supervisory structure is based on two foundational pillars: macroprudential supervision by the ESRB and microprudential supervision by a network consisting of the European and the national supervisory authorities.
The three European supervisory authorities work within a network and in consultation with the existing national supervisory authorities, in order to ensure financial soundness at the level of the individual financial institutions as well as client protection. The European financial supervisory authorities are for this purpose endowed with the following powers in particular:
- development of binding technical standards;
- enactment of guidelines and recommendations;
- direct powers of supervision vis-à-vis national authorities (or secondarily vis-à-vis financial market participants) in the event of
a) violation of Union law (including technical standards);
b) cases of crisis (as defined by the Council);
c) differences of opinion between national authorities in cross-border cases;
d) issuing of warnings and provisional prohibition of certain financial activities where the integrity of the financial markets or the stability of the financial system is threatened;
- obtaining of requisite information concerning financial market participants;
- immediate supervisory powers for ESMA with respect to rating agencies.
The FMA Liechtenstein is a full member of the EBA, ESMA, and EIOPA. As a non-member of the EU, Liechtenstein and the FMA do not have the right to vote in the bodies of these financial supervisory authorities, however. In light of the two-pillar structure of the Agreement on the European Economic Area (EEA), the EFTA Surveillance Authority is given the power to enact binding measures applicable to the national supervisory authorities of the EEA/EFTA States and the financial intermediaries domiciled in the EEA/EFTA States. The power to enact non-binding measures applicable to the national supervisory authorities and financial intermediaries both of the EU and of the EEA/EFTA States remains with the European financial supervisory authorities. Thanks to the powers vested in it, the EFTA Surveillance Authority may take measures directly affecting the national supervisory authorities of the EEA/EFTA States and, in certain cases such as extreme crisis situations, even directly affecting the financial intermediaries domiciled in an EEA/EFTA State. In such cases, the EFTA Surveillance Authority acts on the basis of draft decisions prepared by the European financial supervisory authorities either of their own accord or at the request of the EFTA Surveillance Authority itself. For the EEA/EFTA States, legal recourse against those decisions is available not through the Court of Justice of the European Union, but rather through the EFTA Court.
The ESRB is responsible for the macroprudential oversight of the EU financial system and the prevention and mitigation of systemic risk. The ESRB therefore has a broad remit, covering banks, insurers, asset managers, shadow banks, financial market infrastructures and other financial institutions and markets. In pursuit of its macroprudential mandate, the ESRB monitors and assesses systemic risks and, where appropriate, issues warnings and recommendations. Liechtenstein participates in the work of the ESRB. However, the EEA/EFTA States have not delegated any competence to set binding measures to the ESRB.