News

The top representative of the City of London Corporation on Tuesday began a two-day visit to Luxembourg that includes meetings with Luxembourg for Finance, financial regulator CSSF, the finance ministry and representatives of the grand duchy’s banking sector.

The European Court of Auditors, the EU’s top body designed to improve financial management in the European Union, has criticised the European Central Bank for failing to properly supervise the 110 largest financial institutions in the Eurozone.

A recent European Commission proposal to oblige EU-based eligible counterparties to hold an active account at an EU central counterparty clearing house has raised temperatures in some quarters in Luxembourg.

The US debt ceiling seems to be an endless source of political wrangling, with parties blaming each other and threatening economic chaos. One would almost forget that debt repayment is not up for debate. Not even in the US.

“President Biden is driving America towards its first-ever default, and no one but him will be blamed,” shouts a television ad from the Republican advocacy organisation American Action Network.

Proceeds from Luxembourg registration tax for investment funds remained flat at 1.3 billion euro last year as a small decline at Ucits funds was offset by a steep increase in proceeds from reserved alternative investment funds, or Raifs. The development reflects the growing importance of alternative investment for Luxembourg, although this market remains .

The European Central Bank on Thursday began to slow down its pace of rate hikes, announcing an increase of 25 basis points following seven back-to-back increases of 50 basis points. The ECB said that underlying price pressures in the 20 Eurozone countries remain strong.

Luxembourg is set to modernise its legislation for investment funds under a proposal that will first be discussed later this week in the grand duchy’s parliament. The bill seeks to improve the various structuring options for investment funds. 

The parliament budget and finance committee on Friday will discuss Bill 8183, which was submitted at the end of March. At the 5 May meeting the committee is due to appoint a rapporteur who will coordinate the legislation.

Grand Duchy banks are taking action to prepare for an economic downturn, according to bank sector association ABBL. 

At its annual general meeting on Thursday, the organisation noted that rising interest rates and geopolitical uncertainty have caused households and companies to become reluctant investors. Banks began setting aside more provisions last year in order to cover increased risk of credit defaults - a move already reflected in 2022 figures with an increase of over 400%. 

Luxembourg’s finance minister has tabled a proposal to the grand duchy’s parliament to encourage the uptake of European long-term investment funds known as Eltifs. If adopted, the proposal will exempt Eltifs from requiring to pay the quarterly registration tax levied on Luxembourg investment funds.

The European Central Bank and the EU’s top insurance body have warned that businesses and households are not sufficiently insured against climate-related disasters, raising the risk of financial instability and economic crises. A discussion paper issued this week argued that catastrophe bonds should play a bigger role in bridging the overall climate insurance gap, while national and European authorities need to encourage uptake of policies to prevent such crises from occurring.