The financial centre is one of the central strengths of the Grand Duchy. How is it doing today?

– “The financial industry has developed over the last 50 years thanks to some unique strengths that we managed to bring together and develop continuously in Luxembourg. Strengths are enablers to develop economic activities, for example. Our key strengths have historically been political stability, foresight, speed and hard work. These strengths will serve us well in the future. However we should not assume that what served us well in the past will work in the future. Politics and institutions can provide the framework to foster economic activity, but it is up to economic actors to buy into Luxembourg to develop financial products and services from here. Confidence is the key here. Large financial institutions need to have confidence that both the public and private sectors understand their needs.

To guarantee the competitiveness and sustainability of the financial industry in Luxembourg, what do you think should be the main actions to be taken in 2022?

“The question would make one believe that the development of the financial industry in 2022 and beyond could be achieved through a coordinated set of actions. A very ‘dirigiste’ top-down approach. I don’t believe that to be the case. First and foremost, all actors must meet the highest regulatory standards and those with control and audit functions must do the same. Let’s be in the press for the right reasons. Avoiding errors is usually a good start in ensuring continuous success. Those tasked with representing the interest of the financial industry should choose their battles carefully and in line with what we are good at. The narrative of what we actually do here should be as close as possible with reality. This will inspire confidence and trust. 

What could the Luxembourg financial centre look like by 2030?

“I think that we should first start with a more realistic assessment of what role and function Luxembourg plays in financial services. Before the vision comes the starting point. I would argue that we are much more a centre for financial products than a financial centre per se. Of course there are pockets of trading or investment management expertise here in Luxembourg, but nothing compared to the large financial centre in the world. So to put forward an argument that all the 7.5 trillion of assets under custody or administration are actually managed from here, meaning that buy or sell decisions would be taken here in liquid or illiquid assets, is misleading to say the least. I think where we stand out internationally is our expertise in assembling and servicing financial products sold in Europe and globally. We should aspire to be the location of choice where actors assemble financial products and service them from. A product focus is what we should always have in mind.

For example, we missed the ETF opportunity not just because Ireland had a more favorable tax treaty with the United States. We did not think in terms of products and future products, especially that investors were looking for. On the other hand, the spectacular success in servicing private assets from launch to daily servicing is a good example of where we did really well. If the product focus was our starting point, then the vision would in my mind incorporate that all actors servicing a part of the value chain from ideation to production would need to connect their operations. International clients tend to choose best of breed providers. We have them all. A joined-up connected ecosystem would put us in a very strong position going forward.”