## Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment

_IMF Staff Country Reports, June 7, 2024_

## Source details

**Canonical URL:** [Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment](https://www.imf.org/en/publications/cr/issues/2024/06/07/luxembourg-financial-sector-assessment-program-financial-system-stability-assessment-549936)

## Other formats

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## Bibliographic details
- Published: June 7, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400278204.002

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### 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).*

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_Source: https://www.imf.org/en/publications/cr/issues/2024/06/07/luxembourg-financial-sector-assessment-program-financial-system-stability-assessment-549936_