Could Luxembourg face similar risks as Cyprus?
No. Luxembourg is one of the few European countries with an AAA rating and is the Eurozone’s leading international financial centre. It has weathered the financial crisis very well.
According to European Central Bank data, domestic banks in Luxembourg hold 7% of Luxembourg’s banking assets. In the case of Cyprus, 71% of banking assets are held by domestic banks.
Furthermore, Luxembourg has a high solvency ratio of 17% (19.7% in 2013)
Luxembourg also has a very diversified financial sector, which does not rest solely on one banking activity and better insulates the country from systemic risks.
Finally, Luxembourg has solid and diversified macroeconomic fundamentals (steel industry, car components, logistics, digital economy, satellites, media, audiovisual production, research & development), and the lowest public debt levels in the EU.
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