Author/Editor:

International Monetary Fund. Monetary and Capital Markets Department

Publication Date:

August 28, 2017

Electronic Access:

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Summary:

Luxembourg has a large financial system which contributes a significant share of GDP and is globally interconnected. The investment fund industry, which is central to the business model of large depositary banks in Luxembourg, is the second largest in the world after the United States (U.S.). The banking system is also large relative to GDP, with banks active in activities ranging from private banking and wealth management, depositary and custodian activities, treasury operations for large and systemic banking groups, and traditional retail and commercial banking serving the domestic economy. The size and breadth of financial activities conducted in Luxembourg means the quality of regulation and surveillance, from both a microprudential and macroprudential perspective, is of paramount importance.