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The principality enjoys a very high standard of living and is home to some incredibly beautiful mountain scenery. The principality's capital, Vaduz , is a major centre of commerce and international banking. What is now the Principality of Liechtenstein was for a long time the minor holdings of a powerful noble family from elsewhere. In Liechtenstein changed its alignment from the by then-dissolved German Confederation to Austria Hungary until the end of World War I , when the economic devastation and the breakdown of the dual monarchy caused by that conflict forced Liechtenstein to conclude a customs and monetary union with Switzerland.
Since World War II in which Liechtenstein remained neutral , the country's reputation as a "tax haven" has spurred outstanding economic growth. Outside of banking, Liechtenstein's main economic activities are the production of false teeth and tourism. The Liechtensteinian flag is - by pure accident of history - identical to that of Haiti except for the emblems placed on both. During the Olympics, which were apparently the first time the two flags were displayed close to each other, this was discovered as Haitian civil flags at the time omitted the coat of arms and Liechtenstein added the crown as a symbol of its monarchy and to distinguish it from the civil flag of Haiti, should the two ever be displayed alongside each other.
Shortcomings in banking regulatory oversight have resulted in concerns about the use of the financial institutions for money laundering and tax evasion. However, the days of bringing suitcases of money into banks for deposit with no questions asked are over.
Liechtensteiners are also very proud of the fact that their nation has never been involved in a battle or military confrontation with an enemy state. They see their flag as a banner of peace. However, unlike almost all monarchies in the world there is a provision in the constitution that the prince has to resign and the monarchy has to be abandoned if a majority of the people so desire.
Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and living standards on a par with the urban areas of its large European neighbours. The Liechtenstein economy is widely diversified with a large number of small businesses.