Liechtenstein & Switzerland From a SEPA Perspective

Michael Lauber has been director of the Liechtenstein Bankers’ Association since 2004. He has a law degree from the University of Berne, Switzerland and after working as an examining magistrate, he changed to the Canton Berne Criminal Investigation Department in 1993. From 1995 until 2000, he was the head of the Central Office Organised Crime at the Federal Police Offices, before becoming head of the self-regulation PolyReg in Zurich. Starting in 2001 and in his function as head of the Financial Intelligence Unit (FIU, reporting office for money laundering) Liechtenstein, he was the Liechtenstein delegate for the anti-money laundering committee of the Council of Europe (MONEYVAL) and evaluated Oman and Luxemburg for the IWF/world bank, Cyprus and Monaco for the Council of Europe, and Russia for the working group Financial Action Task Force on Money Laundering.

Q (Gabriel Juri, ClearIT): Austria or Switzerland – which football nation captures your heart in EURO 2008?

A (Michael Lauber, director of Liechtenstein’s Bankers’ Association):I have to admit that I am not a dedicated football fan, thus: may the best team win! As a Swiss, I am excited that for once we get to show a different side at this major event. The same applies to Liechtenstein as a’caught-in-the-middle’ country. Everyone will win in the end if we successfully provide Europeans with an understanding of the diversity and uniqueness of the alpine region of Switzerland, Liechtenstein and Austria.

Q (Juri): There is a football connection between Liechtenstein and Switzerland, since the Liechtenstein football clubs play in the Swiss leagues. In other ways, too, the principality is closely connected to Switzerland through politics and its economy. Direct democracy, the politics of neutrality and customs union are some of the commonalities. And lest we forget: the Swiss franc currency union for more than 80 years, including payment traffic. What are the benefits of the franc as the official currency for Liechtenstein’s financial centre?

A (Lauber): One of the main advantages is that the Swiss franc is a stable currency. Liechtenstein’s banks benefit from the franc’s reputation. Since Liechtenstein doesn’t have its own national bank, as a’lender of last resort’, the Swiss National Bank is also a central factor of stability for local financial institutions. This currency union notwithstanding, Liechtenstein shapes its economic policy individually and according to its own criteria.

Q (Juri): Since Liechtenstein joined the EEA in 1995, it is the only European country that simultaneously is part of two economic areas. Based on this exceptional position, the principality pursues a different path in introducing and implementing the single euro payments area (SEPA). How does Liechtenstein deal with the SEPA requirements?

A (Lauber):For purposes of self-regulation, the European banks have long been proactive. They founded the European Payments Council (EPC), which developed the basis for the fully automated processing bulk payment traffic of euro payments by creating the definition of uniform payment processing and conventions. The Liechtenstein banks thus adopt SEPA regulations through this contract with the EPC. In addition, and as opposed to Switzerland, Liechtenstein is committed to implementing the EU Payments Services Directive (PSD) based on the EEA membership. This is the requirement governing introduction of SEPA-compatible direct debits. The goal is timely implementation by November 2009.

In order to meet this deadline and to work towards a practice-oriented implementation, our organisation has sought communication with the Liechtenstein Financial Market Authority (FMA) and installed an internal working group. Next year, Swiss Interbank Clearing in its function as National Adherence Support Organisation (NASO), will examine and forward to the EPC the banks’ applications to participate in the SEPA Direct Debit (SDD) Scheme for Liechtenstein financial institutions, too – analogous to the adherence process for the SEPA Credit Transfer (SCT) Scheme.

Q (Juri): And speaking of SEPA credit transfers, since the SEPA-start in January 2008, of 15 members of the Liechtenstein Bankers’ Association only three – Raiffeisen Bank, Liechtenstein Landesbank and LGT Bank – have joined this process. Why?

A (Lauber): The Liechtenstein banks’ core business is predominately in private banking. Therefore, the classic payment traffic is not necessarily part of the main services provided by all of our financial institutions. But we assume that other banks will join according to the needs of their customers.

Q (Juri): 25% of all Liechtenstein employees are commuters from the eurozone, approximately 40% of exports go there while only 12% to Switzerland, as a result, in your country, the euro plays an increasingly significant role. What still supports your use of the Swiss franc?

A (Lauber):Based on the foreign trade activities maintained with predominately European member countries – first and foremost with Germany – the euro indeed plays a significant role for Liechtenstein. Having said that, though, there is a clear difference to be made between membership to the EEA and membership in the European Monetary Union (EMU) (with the euro as its sole currency). Just like Switzerland, Liechtenstein is not an EMU participant country, and the currency question is not part of the EEA agreement. Joining the currency area would only be possible by becoming an EU member. This is not currently being discussed.