FMA presents report on the stability of Liechtenstein's financial sector
Measures increase stability
Once again, the Liechtenstein financial sector is proving to be stable and resilient overall in a difficult environment. Measures recommended in the reports of recent years and implemented by the Financial Market Stability Committee are also already having an effect. The borrower-based measures have strengthened financial stability and reduced systemic risks - in particular the vulnerabilities of banks with regard to the real estate market. The harmonization of the definition of sustainable affordability was important in this context - also for comparability in the banking sector.
The measures are aimed at gradually reducing risks while maintaining access to the mortgage market. Banks are still allowed to grant ETP loans, but the aim is to seek to amortize loans that are not sustainable in terms of affordability and to increase risk awareness among borrowers.
Initial feedback on implementation indicates improved risk management and increased awareness among borrowers, supported by improved data collection. The figures also reflect a relatively stable situation: household debt has fallen slightly in relation to GDP, but remains the highest in the entire EEA due to structural factors. The proportion of exceptional transactions has also remained stable overall, with a large proportion of these cases being attributable to affordability. Such loans are subject to the corresponding minimum amortization requirements, which reduce the risk.
Focus on proportionality
At the subsequent panel discussion, Christoph Reich, Group CEO Liechtensteinische Landesbank, and Olivier de Perregaux, CEO LGT Private Banking, discussed current financial stability issues with Mark Branson and Mario Gassner, Chairman of the Executive Board of the FMA. In particular, the focus was on the proportionality of regulation. However, borrower-based measures and the relationship between risks and stability were also discussed.
Head of government Brigitte Haas also referred to the importance of stability in her speech, but at the same time emphasized that stability does not mean resting on one's laurels. According to the head of government, adapting to changing conditions ultimately contributes to stability.
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