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Occupied by both French and Russian troops during the Napoleonic Wars, it became a sovereign state in and joined the German Confederation in Liechtenstein became fully independent in when the Confederation dissolved. Until the end of World War I, it was closely tied to Austria, but the economic devastation caused by that conflict forced Liechtenstein to enter into a customs and monetary union with Switzerland. Since World War II in which Liechtenstein remained neutral , the country's low taxes have spurred outstanding economic growth.
In , shortcomings in banking regulatory oversight resulted in concerns about the use of financial institutions for money laundering. However, Liechtenstein implemented anti-money laundering legislation and a Mutual Legal Assistance Treaty with the US that went into effect in German Roman Catholic official Despite its small size and lack of natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial services sector and one of the highest per capita income levels in the world.
The Liechtenstein economy is widely diversified with a large number of small and medium-sized businesses, particularly in the services sector. Low business taxes - a flat tax of The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. The government is working to harmonize its economic policies with those of an integrated EU.
Since , Liechtenstein has faced renewed international pressure - particularly from Germany and the US - to improve transparency in its banking and tax systems. Upon Liechtenstein's conclusion of 12 bilateral information-sharing agreements, the OECD in October removed the principality from its "grey list" of countries that had yet to implement the organization's Model Tax Convention.