Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment

Luxembourg: Financial Sector Assessment Program-Financial System Stability Assessment
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Volume/Issue: Volume 2024 Issue 157
Publication date: June 2024
ISBN: 9798400278204
$20.00
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Finance , Economics- Macroeconomics , Money and Monetary Policy , International - Economics , stress test result , coverage ratio , Investment Funds sector , banking sector supervision , FSAP mission , insurance liquidity analysis , Mutual funds , Stress testing , Macroprudential policy , Financial Sector Assessment Program , Global

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Summary

The assessment of Luxembourg’s large, interconnected, and complex financial system took place against heightened economic, financial, and geopolitical uncertainty. Investment funds have grown since the 2017 FSAP, while their connections to other funds, banks, nonbank financial intermediaries, and foreign entities have also increased. Domestic banks face risks from the ongoing downturn in credit and house price cycles, especially in the high-risk mortgage segment. Securities portfolios in large banks are mostly held-to-maturity and spread across euro area issuers. The banking sector maintains higher capital ratios than euro area peers, has low but rising nonperforming loans, and benefits from support to the economy from a AAA-rated sovereign.