Luxembourg: Selected Issues

April 3, 2018

Preview Citation

Format: Chicago

Luxembourg: Selected Issues, (USA: International Monetary Fund, 2018) accessed November 23, 2024

Summary

This Selected Issues paper provides an overview of the impact of monetary policy on Luxembourg’s macroeconomy. It analyzes the impact on the banking system, including risks that could result from normalization. It also studies the impact of accommodative monetary policy on the investment fund industry. Accommodative monetary policy has contributed to the performance of the Luxembourg economy through some expansion of aggregate demand and through its impact on the financial system. Banks have remained profitable and interest margins stable, while fee and commission income from the fund and other activity has been healthy. The investment fund industry has benefited from various factors such as portfolio rebalancing, search for yield, and other market developments leading to strong inflows into various classes of investment funds, and through strong valuation effects. Scenario analysis suggests that the fund industry could be adversely impacted by sharp interest rate increases and that, because of interconnections, the banking system would also be affected.

Subject: Financial institutions, Housing, Housing prices, Labor, Labor markets, Mutual funds, National accounts, Prices, Unemployment

Keywords: Accommodative monetary policy, CR, Europe, Global, House price, Housing, Housing prices, Investment fund industry, ISCR, Labor markets, Monetary policy announcement, Mutual funds, Participation rate, Price growth, Saving-investment decision, Unemployment, Work, Worker

Publication Details

Pages:

69
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2018/097
Stock No:

1LUXEA2018002
ISBN:

9781484350041
ISSN:

1934-7685

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