Covered Bonds In Liechtenstein

Liechtenstein has reached a historic milestone in financial regulation: for the first time, the jurisdiction has established a dedicated covered bond regime. By introducing both the EuGSVG and the Pfandbriefgesetz, Liechtenstein has not only implemented the European covered bond framework, but has also created a distinct national model tailored to the needs of its own financial centre.

This article examines that landmark development and analyses how the new legal architecture opens the door to a well-established funding instrument while marking a new chapter in Liechtenstein banking and capital markets law.

Introduction

Covered Bonds: The “Pfandbrief”

A Pfandbrief is generally understood to be a secured debt security issued by a credit institution (“bank”). Owing to its special statutory framework, it is intended to guarantee a particularly high level of protection for investors; historically, Pfandbriefe were even regarded as a form of especially safe trustee investment (Art