Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment
IMF Staff Country Reports, June 7, 2024
Source details
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- Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment
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Bibliographic details
- Published: June 7, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400278204.002
Overview and context
- Presents Luxembourg’s Financial System Stability Assessment report.
- Assessment conducted against heightened economic, financial, and geopolitical uncertainty.
- Authorities have made commendable progress in following up on recommendations from the 2017 Financial Sector Assessment Program (FSAP).
Key findings from stress testing and system resilience
- Stress tests found the financial system resilient to severe shocks, while identifying a few potentially weak entities.
- Higher interest rates have benefited banks, despite increasing loan losses among households and real estate companies.
- Under plausible adverse scenarios, the system can handle significant liquidity shocks, with minimal second-round price impacts.
- Growing connections of other financial intermediaries with investment funds and related data gaps call for greater monitoring.
Macroprudential and supervisory recommendations
- Strengthen the macroprudential policy framework by reducing the risks of inaction bias.
- Expand the use of policy measures against rising real-estate vulnerabilities.
- Banks should use the capital headroom to:
- implement a sectoral systemic risk buffer, and
- prepare for tightened borrower-based measures when the financial cycle turns positive.
Publication and metadata
- Publication date: June 7, 2024
- Series: Country Report No. 2024/157
- Issue: 157
- Volume: 2024
- Pages: 72
- DOI: https://doi.org/10.5089/9798400278204.002
- Stock No: 1LUXEA2024003
- ISBN: 9798400278204
- ISSN: 1934-7685
Subjects and keywords
- Subjects: Financial institutions, Financial Sector Assessment Program, Financial sector policy and analysis, International organization, Macroprudential policy, Monetary policy, Mutual funds, Stress testing
- Keywords: banking sector supervision, coverage ratio, Financial Sector Assessment Program, FSAP mission, Global, insurance liquidity analysis, Investment Funds sector, Macroprudential policy, Mutual funds, stress test result, Stress testing
Associated technical notes listed in the report
- Luxembourg: Financial Sector Assessment Program—Technical Note on Investment Funds: Regulation and Supervision
- Luxembourg: Financial Sector Assessment Program—Technical Note on Selected Issues in Banking Supervision
- Luxembourg: Financial Sector Assessment Program—Technical Note on Stress Testing and Systemic Risk Analysis
- Luxembourg: Financial Sector Assessment Program—Technical Note on Insurance Regulation and Supervision
- Luxembourg: Financial Sector Assessment Program—Technical Note on Macroprudential Policy Framework, Tools, and Calibration
International Monetary Fund. Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment. IMF Staff Country Reports 2024, 157 (2024).
Content in this bundle
- 1luxea2024003