Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

LUXEMBOURG

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of April 30, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)In accordance with UN Security Council resolutions and relevant EU regulations, certain restrictions are maintained with respect to the Democratic Republic of the Congo, Côte d’Ivoire, Iraq, Liberia, Myanmar, Somalia, Sudan, Uzbekistan, and Zimbabwe. Restrictions apply with respect to individuals associated with the government of the former Federal Republic of Yugoslavia and with respect to Al-Qaida, the Taliban, and individuals or organizations associated with terrorism.
Other security restrictionsIn accordance with relevant EU regulations, the following restrictive measures apply: (1) effective April 19, 2007, against the Islamic Republic of Iran (Council Regulation (EC) No. 423/2007); (2) effective February 21, 2006, against certain persons suspected of involvement in the assassination of former Lebanese Prime Minister Rafik Hariri (Council Regulation (EC) No. 305/2006); (3) effective May 18, 2006, against President Lukashenko and certain officials of Belarus (Council Regulation (EC) No. 765/2006); and (4) effective March 27, 2007, against the Democratic People’s Republic of Korea (Council Regulation (EC) No. 329/2007).
References to legal instruments and hyperlinksCouncil Regulations (EC) Nos. 423/2007, 305/2006, 765/2006, and 329/2007.
Exchange Arrangement
CurrencyThe currency of Luxembourg is the euro.
Exchange rate structureUnitary.
Classification
Independently floatingLuxembourg participates in a currency union with 12 other members of the EMU and has no separate legal tender. Effective January 1, 2007, the exchange arrangement of the EMU countries has been reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus reflects only a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadControls apply to deposits held with financial institutions established outside the EU if these assets are to form part of the technical provisions of an insurance company or of a private pension fund.
Accounts in domestic currency held abroadControls apply to deposits held with financial institutions established outside the EU if these assets are to form part of the technical provisions of an insurance company or of a private pension fund.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsAccounts affected by international security restrictions are blocked.
References to legal instruments and hyperlinksn.a.
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 (imports from another EU member country do not require licenses), including textile and steel products, diamonds, and weapons. All other commodities are free of license requirements.
Licenses with quotasAn EU quota system is applied to imports of certain textile products (10 categories) originating in China, along with the other EU countries. Luxembourg applies a system of quotas to some steel products originating in Kazakhstan, the Russian Federation, and Ukraine. A double-checking system (with quota) is applied to imports of some steel products from Moldova.
Other nontariff measuresThe EU’s prior surveillance system is in effect on imports of certain steel products originating in non-EU countries.
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.
References to legal instruments and hyperlinksn.a.
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, dual-use goods, and diamonds. Export licenses are also required for exports to countries under UN embargo.
Without quotasYes.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsControls apply to the purchase of securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company or of a private pension fund.
Bonds or other debt securities
Purchase abroad by residentsControls apply to the purchase of securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company or of a private pension fund.
On money market instruments
Purchase abroad by residentsControls apply to the purchase of securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company or of a private pension fund.
On collective investment securities
Purchase abroad by residentsControls apply to the purchase of securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company or of a private pension fund.
Controls on derivatives and other instruments
Purchase abroad by residentsControls apply to the purchase of or swap operations in instruments and claims issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company or of a private pension fund.
Controls on credit operations
Financial credits
By residents to nonresidentsControls apply to credits and loans granted to nonresident borrowers if these assets are to form part of the cover of the technical provisions of an insurance company or of a private pension fund.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsControls apply to the acquisition of real estate situated outside the EU if the assets in question are to form part of the cover of the technical provisions of an insurance company or of a private pension fund.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsControls apply to the purchase of capital, money market, and collective investment securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company.
Limits (max.) on investment portfolio held abroadControls apply to (1) deposits held with financial institutions established outside the EU if these assets are to form part of the technical provisions of an insurance company; (2) credits and loans granted to nonresident borrowers if these assets are to form part of the cover of the technical provisions of an insurance company; (3) the purchase of or swap operations in instruments and claims issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of an insurance company; and (4) the acquisition of real estate situated outside the EU if the assets in question are to form part of the cover of the technical provisions of an insurance company.
Currency-matching regulations on assets/liabilities compositionThese are applicable only to insurance undertakings.
Pension funds
Limits (max.) on securities issued by nonresidentsControls apply to the purchase of capital, money market, and collective investment securities issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of a private pension fund.
Limits (max.) on investment portfolio held abroadControls apply to (1) deposits held with financial institutions established outside the EU if these assets are to form part of the technical provisions of a private pension fund; (2) credits and loans granted to nonresident borrowers if these assets are to form part of the cover of the technical provisions of a private pension fund; (3) the purchase of or swap operations in instruments and claims issued by non-EU residents if the assets in question are to form more than 5% of the cover of the technical provisions of a private pension fund; and (4) the acquisition of real estate situated outside the EU if the assets in question are to form part of the cover of the technical provisions of a private pension fund.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange measuresFebruary 21. Restrictions were imposed against certain persons suspected of involvement in the assassination of former Lebanese Prime Minister Rafiq Hariri.
May 18. Restrictions were imposed against President Lukashenko and certain officials of Belarus.
Changes during 2007
Exchange measuresMarch 27. Restrictions were imposed against the Democratic People’s Republic of Korea.
April 19. Restrictions were imposed against the Islamic Republic of Iran.
Exchange arrangementJanuary 1. The exchange arrangement of the EMU countries was reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification reflects only a definitional change.

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