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Luxembourg
Luxembourg has become one of the world's leading financial centres through its know-how and its Long and rich experience.Luxembourg's financial centre has taken full advantage of the country's political and social stability and its favourable legal framework.Luxembourg is a key international financial centre, ranked seventh among the largest financial centers in the world with more than 156 banks and characterized by its maturity, innovativeness and adaptability


Luxembourg is a constitutional monarchy with Long standing and well established democratic institutions. The situation of the country at an economic and cultural crossroad at the heart of Europe is considered as a strong advantage.Luxembourg has confirmed its importance as a centre for Eurobonds with a big emphasis in ECU's, and the Future is likely to attract more and more investment funds in European Currency Units to this comparatively young, but steadily growing centre. The multi-lingual abilities and very High education level of the working population provide Local businesses with first-rate staff, whilst the advanced technological infrastructure of the country guarantees the best-possible Future support for the finance Spot. It is no coincidence that ASTRA, the European Television Satellites, are owned and controlled by SES, based in Luxembourg.


Financial Background
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With the object of maintaining the good reputation of every individual bank and of Luxembourg as a financial centre in general, all persons in the financial business who are organised within the professional association (ABBL) have agreed to comply with standard rules of conduct which have been set out in a Professional Code of Conduct.

The upcome of Luxembourg as a financial centre has mainly been encouraged by its favourable legal and Tax regimes, which have become particularly attractive as a result of outside factors such as the adoption of fiscal measures in third countries. Its main distinctive features are banking confidentiality, the fact that Interest on savings is not taxed at source (this applies until 2004), the flexible system in terms of banking provisions, and active measures to combatmoney laundering. Its rapid transposition of European Union directives, the effectiveness of its prudential supervision, its skilled, multilingual workforce, convenient geographical location and competitive operating costs, particularly in terms of income Tax and national insurance  have boosted its expansion as a financial centre.

The development of holding companies was the first main factor in Luxembourg's growth as a centre of finance.The growth of holding companies gained added impetus in 1965 when their legal framework was extended.The Luxembourg stock Exchange has consolidated its predominant role in international bonds and investment funds. It has two niche markets: issuance and Quotation (with less emphasis on transactions) and bonds (with less emphasis on shares and warrants).

The number of foreign banks in Luxembourg has grown not continuously but in waves, as third countries have implemented Tax and regulatory measures and other policies which are unfavourable to their citizens. Luxembourg's preferential fiscal and regulatory treatment of the banking sector has made it a popular destination for foreign banks, and there have been considerable inflows of private funds.

Until recently, Luxembourg's insurance sector concentrated exclusively on the domestic market. It did not acquire an international focus until 1984, with the creation of a legal framework for reinsurance companies and the development of a free provision of services.The small size of the market, and the need to share Risk, led many foreign insurance companies to establish operations in Luxembourg.The Luxembourg financial sector comprises 154 credit institutions from 26 different countries holding Balance Sheet assets of over EUR 843 billion as at 30 September 2006. The country represents the first International Private banking centre in the Euro-Land and the second largest Investment Funds industry after the USA and ranks eighth among the largest financial centres in the world.
Posted by  Institute for International Research
 
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