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Luxembourg, a global financial centre

Banking

31/05/2011Luxembourg, a global financial centre

This overview explains the key factors in Luxembourg's position as a center of global finance.

Squeezed in between its larger neighbours Germany and France, the Grand Duchy of Luxembourg is a small but well developed independent country with a diversified economy. With only 500,000 residents, 40 percent of whom are expats and immigrants, an estimated 125,000 workers commute daily to work in Luxembourg from bordering regions to support its economy. With three official languages (French, German, Luxembourgish) and its international exposure, Luxembourg's workforce in one the most multilingual and multicultural in Europe.

Luxembourg's openness to foreign investment and its position as a highly regarded and solid international financial centre have attracted more than 150 international banks servicing clients across the world. In addition, Luxembourg has grown to become the biggest investment fund centre in the world, after the United States. Wealth management, asset management, international loans, insurance and structured finance are also areas in which Luxembourg has earned a solid reputation.

Battle of Wills by Internaxx

The government, legislators and private enterprise cherish the country's stability and are engaged in a permanent dialogue to identify, understand and act on possible industry challenges. Luxembourg also has a unique "tripartite" (three party) system in place, in which the government regularly meets with unions and employers to discuss disagreements, solve problems and create consensus.

Due to this approach, Luxembourg does not experience the level of strikes or employee dissatisfaction as often seen in neighbouring Belgium or France. These consultations between government and industry stake holders are the foundation of what is called the "Luxembourg model", in which negotiations and compromise take precedence over paralysing the economy with hurtful strikes or demonstrations. This is one of the factors contributing to the country's stability and prosperity, and the envy of many industrialised countries.

Luxembourg is proactive in responding to any development, in Europe or beyond, and that may have an impact on its position as a global financial centre. It has flexible and innovative legislation in place and is compliant with international banking rules, while also being an active participant in the combat against money laundering and terrorism financing.

What are Luxembourg's distinctive features?