Chapter

LUXEMBOURG

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyAs of January 1, 1999, the currency of Luxembourg is the euro. In cash transactions, however, the legal tender remains the Luxembourg franc and the Belgian franc until 2002, when euro banknotes and coins will be issued.
Other legal tenderThe Belgian franc also circulates as legal tender.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderLuxembourg participates in a currency union (EMU) comprising 11 members of the EU: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Internal conversion rates in respect to the national currencies of EMU participants were fixed to the euro on January 1, 1999, whereas the external exchange rate of the euro is market determined. The conversion rate between the euro and the Luxembourg franc was set at Lux F 40.3399 per €1. The ECB has the right to intervene to smooth out fluctuations in external exchange rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangementsNo.
Administration of controlNo.
International security restrictionsCertain restrictions are imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia/Montenegro), Iraq, Libya, and the UNITA movement in Angola.
In accordance with Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsYes.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsThese are accounts affected by international security restrictions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Positive listPayments for imports may be made freely. Individual licenses are required for certain specified imports from all countries (most imports do not require an import license when imported from another EU member country), including many textile and steel products, diamonds, weapons, and nontextile products from China. All other commodities are free of license requirements.
Licenses with quotasAlong with EU countries, Luxembourg applies quotas on a number of textile products from non-EU countries in the framework of the MFA. It also applies a system of quotas on some steel products originating in Kazakhstan, Russia, and Ukraine. A double-checking system (without quotas) is applied to imports of some steel products from Bulgaria, the Czech Republic, the former Yugoslav Republic of Macedonia, Poland, Romania, and the Slovak Republic. Quotas are applied on a number of products from China, such as ceramics, porcelain, and shoes.
Import taxes and/or tariffsLuxembourg applies the Common Import Regime of the EU to imports of most other agricultural and livestock products from non-EU countries.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are required for a few products, mostly of a strategic character, such as arms and dual-use goods, and diamonds. Export licenses are also required for exports to countries under UN embargo.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Currency-matching regulations on assets/liabilities compositionThese are applicable only to insurance undertakings.
Other controls imposed by securities lawsNo.
Changes During 1999
Exchange arrangementJanuary 1. The currency of Luxembourg became the euro. The conversion rate between the euro and the Luxembourg franc was set irrevocably at Lux F 40.3399 per€1.

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