No EU country depends on its financial sector to the same degree as Luxembourg does. Its Fund administration industry is the second biggest worldwide. Total banks' assets exceed the Grand-Duchy's GDP about 18 times and this might read startling at first hand as many experts derive a linear relation between a country's banking sector and the sovereign's contingent liability. Yet a more relevant measure is the magnitude of domestic banks, whose aggregate size is only 150% of GDP and merely a handful of banks provide retail services to the local economy. Guaranteed deposits amount to less than two thirds of Luxembourg's GDP and the failure of three Icelandic banks' subsidiaries were well-managed.
|ISBN 978-92-79-32379-9 (online)|