Agefi Luxembourg - avril 2025

Avril 2025 7 AGEFI Luxembourg Economie / Fiscalité D espite ongoing geopolitical ten- sions and shiftingmarket dy- namics, Luxembourg’s financial sector demonstrated adapta- bility and resilience in a complex eco- nomic andoperational environment. In 2024, the financial services industry saw steady growth, exceptional in some seg- ments, and continued to attract international investment. Key Figures: - 61 new entities licensed or authorised by Luxembourg’s financial regulators - Employment growth in the financial sector of 3.9%, rising to over 70,000 people - Assets under management rose to over €7.3 trillion, an 11.5% increase in a year - Over 2,300 Global Social Sustainable and Sustainability-Linked bonds were listed on the Luxembourg Green Exchange at year end, a 23% increase, amounting to over €1.2 trillion - Luxembourg life insurance saw a record brea- king year, with premiums increasing by over 41% to reach over €26 billion Luxembourg’s financial industry continued its steady expansion in 2024, deepening and diversi- fying the financial centre. The country’s two finan- cial regulators licensed or authorised 61 new enti- ties during the year. This included the arri- val of two new banking institutions, Banco Inversis and Banco Votorantim; two electronic money institutions, inclu- ding LianLian Europe; five Virtual Asset Service Providers (VASPs) including Standard Chartered and B2C2; seven authorised Alternative Investment Fund Managers (AIFMs); and 41 registered AIFMs. The establishment of China Taiping inLuxembourg saw the first Chinese insurer licensed in the country. Employmentwithin financial services also showedmomen- tum, rising by 3.9% to over 70,000people, reflecting confi- dence inLuxembourg’s econo- mic stability and its attractive- ness to global talent, whether for career or personal reasons. “Luxembourg’s continued growth in a complex global market is testament to our financial eco- system’s resilience, its focus on innovation, and commitment to sustainability,” noted Tom Théobald (portrait), CEO of Luxembourg for Finance. “We remain dedicated to fostering a deep and diverse financial centre that supports long-term international investment and helps connect global markets.” Assets under management experienced strong growth last year, increasing by 11.5% to exceed €7.3 trillion in mutual funds and AIFs. Growth was strongest in alternative funds, 13.2%, and AIFs now represent one-third of Luxembourg’s fund industry. Over the course of 2024, Luxembourg further entrenched its foothold as Europe’s leading alternative fund domicile. In mutual funds, AuM increased by 10.7% y-o-y. Luxembourg also saw continued growth in ESG funds, with AuM in ESG UCITS funds rising by 5.6% between end-H1 2023 and end H1-2024, to reach €3.2 trillion. Luxembourg-domiciled AuMGrowth (Mutual Funds and AIFs) in EUR tn The country continued to solidify its role at the forefront of sustainable finance. The Luxembourg Green Exchange listed more than 2,300 Green, Social, Sustainable, and Sustainability-Linked (GSSS) bonds totalling approximately €1.2 trillion by the end of the year. Luxembourg thus continues to consolidate its position as the world’s leading centre for GSSS securities. The insurance sector experienced exceptional growth in 2024, highlighted by record-breaking performance in life insurance. Life insurance pre- miums surged by 41%, reaching approximately €26.8 billion, driven primarily by a remarkable 72.4% increase in classical life insurance pre- miums and a substantial 28.9% rise in unit-linked life insurance premiums. Non-life insurance continued to perform well, with overall pre- miums increasing by 4.3%. Reinsurance pre- miums also grew steadily by 4.1%, further under- lining the sector’s diverse and balanced nature. “Growing investor demand for diversification, including in private assets, has provided signi- ficant tailwinds for Luxembourg. Building on its existing strengths and continuing to expand its expertise in areas such as alternative funds, corporate banking and digital assets, the coun- try is effectively positioned to meet evolving investor preferences, demonstrating adaptabi- lity that goes beyond mere resilience,” highligh- ted Théobald. He added: “Looking ahead, the government’s comprehensive tax package, which entered into force in the beginning of 2025, will help sustain the current momentum, attracting more high- quality talent, and strengthening the financial centre’s overall competitiveness.” Source: LuxembourgforFinance Private assets and life insurance drive strong growth in Luxembourg’s Source: CSSF and BCL Opinion - by Bruno COLMANT, Ph.D., CFA, Member of the RoyalAcademy of Belgium D ay by day, it is beco- ming easier to discern the outcome of Donald Trump’s decisions. He seeks to create a new world order based on global fragmentation to ensure the supremacy of the United States. The dollar must, therefore, be examined closely. It is a subject gaining increasing attention in political and academic circles, though it has yet to cross the At- lantic fully. According to Donald Trump, a new world order de- pends on a weak dollar. Indeed, to maintain the dominance of their currency, the United States needs an abundant and trans- actional dollar, deeply embedded in every facet of global trade, rather than a strong currency that penalizes American exports and encour- ages hoarding. Unfortunately, Trump’s initial measures have strengthened the dollar. Tariffs on imports, tax cuts, and the presumed expulsion of illegal res- idents fuel inflation. However, this inflation must be countered by the U.S. central bank, the Federal Reserve, whose mandate includes en- suring price stability through sufficiently high interest rates to curb inflation. And higher U.S. interest rates make the dollar more attractive, thus driving its appreciation. There is an evident contradiction here, but one certainty emerges: a weaker dollar will ulti- mately prevail in the chaos of these conflicting impulses. This is all the more likely as U.S. pub- lic debt reaches unsustainable levels, and the cost of servicing this debt will soon surpass the country’s defense budget. Therefore, the United States will inevitably implement authoritarian and unconventional measures, not in negotia- tion with other monetary authorities, but through unilateral force. In this regard, it is worth recalling the paradox identified by Belgian economist Robert Triffin (1911-1993), advisor to President John F. Kennedy (1917-1963), who predicted that the dol- lar could not simultaneously be a strong currency and provide global liquidity. This insight led him to foresee the collapse of the gold standard sys- tem, conceived in 1944 and dismantled by the United States in 1971, resulting in the dramatic devaluation of the dollar throughout the 1970s. At this stage, one man is becoming increasingly central within Donald Trump’s inner circle: Stephen Miran, 41 years old, the new Chairman of the Council of Economic Advisors at the White House and a close ally of Treasury Secre- tary Scott Bessent. Miran has developed a the- ory combining tariffs and dollar manipulation aimed at achieving three objectives : - Financing the immense U.S. public deficit which has reached unprecedented depths. - Devaluing the dollar to boost U.S. ex- port potential. - Maintaining low interest rates on U.S. debt so that the dollar remains a transac- tional currency rather than a store of value ensuring its continued role as a global liquidity provider. Miran is an outspoken critic of Federal Reserve Chairman Jay Powell and challenges the Fed’s independence, arguing that it con- tradicts democratic principles and the U.S. constitutional system. According to Miran, Federal Reserve officials must be subject to dismissal by the President at any time. His vision extends further: Miran suggests that U.S. tariffs should become a negotiation tool, adjusting based on whether trade partners agree to subscribe to ultra-long-termU.S. bonds (up to a century) or even perpetual bonds as a condition to avoid trade wars or losing U.S. military protection. The value of these bonds would quickly trend toward zero due to inflation and the dollar’s de- preciation. As a result, countries trading with the United States or relying on its military pro- tection would be forced to finance the U.S. for free—which would further weaken the dollar. But Miran goes even further. He proposes that the White House use special executive powers to reduce interest payments on U.S. bonds held by foreign central banks that refuse to revalue their currencies relative to the dollar. These measures are drastic, and I believe that Donald Trump will place the Federal Reserve under his direct control, forcing it to refinance U.S. debt at a zero—or even negative—interest rate. If that happens, the real interest rate on U.S. debt will become negative after account- ing for inflation, leading to the gradual col- lapse of the dollar. Its value will erode due to inflation, with no counterbalancing effect from interest rates. This would be unprecedented in monetary history, as the dollar remains the global reserve cur- rency. It would gradually lose its value, trigger- ing widespread competitive devaluations of other currencies. This scenario is not hypothetical; it played out in the 1970s during extreme monetary chaos and runaway inflation. For now, all of this re- mains within monetary science fiction. But per- haps not for long. The key issue is not whether one is right too soon but recognizing that if Donald Trump unilaterally weakens the dollar, global banking risk models will not hold up. The question is not what will replace the dollar but how banking risk management can with- stand a massive depreciation of the U.S. cur- rency. Europeans are unprepared for these possibilities, which remain uncertain but in- creasingly plausible. The European Central Bank (ECB) must prepare for unexpected devel- opments. The first month of Donald Trump’s presidency has alreadydelivered toomany shocks for us to assume that U.S. monetary policywill remain unaffected. Dollar: the newmonetary policy of the United States Deloitte TransferPricing Talks2025 Get Ready for the Ride 20May at ConfiserieNamur Ina constantlyevolving globaltax landscape, staying ahead ofthe curve ismorevitalthan ever. "Get Ready for theRide" as Deloitte's Transfer PricingTalks 2025 returnswitha sharpfocusonthe critical issuesshaping today'stransfer pricingenvironment. Explore the transfer pricingimplicationsof thenew international tax regulationsandgain practicalinsightsfrom industry peers astheyshare their experiences navigating the transfer pricing lifecycle. This event offers more thanjust technicalupdates, it’s a space to connectwith leading professionals, ask questions, andleavewith actionable strategies tailored to your needs. © 2025 Deloitte Tax & Consulting,SARL Interested? Contact luevents@deloitte.lu