IMF considering Liechtenstein application

The European country of Liechtenstein has applied to join the International Monetary Fund. Managing director Kristalina Georgieva formally notified the fund’s executive board of the application on May 31.

The IMF board of governors will make the final decision on admission. The executive board will submit a recommendation to the governors, which will include Liechtenstein’s proposed quota of IMF capital.

Liechtenstein’s government announced it would apply to join the fund in July 2022. Prime minister Daniel Risch said the country wanted a secure source of emergency liquidity, as it has no central bank.

In an interview with the German daily Handelsblatt, published May 5, Risch said “we cannot save the banks ourselves in an emergency”. However, he expressed faith the country’s banking sector was sound.

According to its financial regulator, Liechtenstein’s banking sector had 12 lenders in 2021, with total assets of Sfr424 billion ($464.1 billion).

The government also says the IMF helps maintain the stable trade and currency systems the country relies on. It says IMF membership would increase its attractiveness as a destination for foreign business.

Liechtenstein has fewer than 40,000 inhabitants and has a large offshore financial sector. It is in a currency union with Switzerland and uses the Swiss franc.

The IMF has 190 member states. Andorra, another European microstate, joined the IMF in 2020, and was assigned a quota of 82.5 million special drawing rights ($109.7 million). Its GDP was $2.9 billion in 2020, according to World Bank estimates, compared with Liechtenstein’s $6.1 billion.