Luxembourg: Financial System Stability Assessment

IMF Staff Country Reports, May 15, 2017

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Luxembourg: Financial System Stability Assessment

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Bibliographic details

• Published: May 15, 2017
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781484300374.002

Executive summary

• This paper evaluates the stability of the financial system of Luxembourg.
• Financial soundness indicators for Luxembourg’s financial system, which plays a key role in the intermediation of financial capital, have remained relatively robust in recent years.
• Following rising asset prices and inflows, the investment fund industry has enjoyed strong growth in assets under management, while exposure to liquid assets has remained steady.
• An assessment of the financial system’s ability to withstand severe but plausible shocks suggests a good deal of resilience, albeit with some risks.
• Insurance stress test results indicate that strong initial levels of capital and low guaranteed product exposure offer insulation against market shocks.

Key findings

• Financial soundness indicators remained relatively robust in recent years.
• Investment fund industry:
  • Experienced strong growth in assets under management following rising asset prices and inflows.
  • Exposure to liquid assets has remained steady.
• System-wide resilience:
  • Stress testing of the financial system under severe but plausible shocks indicates a good deal of resilience, although some risks persist.
• Insurance sector:
  • Stress test results point to insulation against market shocks due to strong initial levels of capital and low guaranteed product exposure.

Scope and topics covered

• Subject classifications listed on the source:
  • Banking
  • Financial institutions
  • Financial regulation and supervision
  • Financial sector policy and analysis
  • Insurance companies
  • Liquidity requirements
  • Liquidity stress testing
  • Mutual funds
  • Stress testing
• Keywords provided on the source include:
  • CR, finance minister, financial system, foreign exchange, Global, Insurance companies, investment fund assets, investment funds, ISCR, liquid asset, Liquidity requirements, Liquidity stress testing, Luxembourg insurance industry, Luxembourg subsidiary, Luxembourg-domiciled fund, money market fund, Mutual funds, short-term debt, Stress testing

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