Luxembourg: Financial Sector Assessment Program—Technical Note on Selected Issues in Banking Supervision

This paper presents a technical note on Selected Issues in Banking Supervision for the Luxembourg Financial Sector Assessment Program (FSAP). This review examines specific aspects of the banking supervision regime in Luxembourg focusing on the supervision by the Commission de Surveillance du Secteur Financier (CSSF) of Less Significant Institutions. No material weaknesses were identified in the CSSF’s supervisory processes in the areas of focus of the review—namely, LSI supervision of liquidity, interest rate risk in the banking book, operational risk, and related-party transactions. The financial sector in Luxembourg has continued to grow since the 2017 FSAP and plays key domestic and global roles. Luxembourg, as a founding Member State of the EU, the wider European Economic Area, and the Euro area, has incorporated European directives to regulate financial services. This includes the implementation of International Financial Reporting Standards for prudential reports in compliance with EU rules. Local Generally Accepted Accounting Principles are used for preparing annual statutory accounts, and the CSSF oversees the audit profession, approving statutory auditors and audit firms.