Each year, the European Central Bank publishes consolidated statistical data on non-cash payment habits within the euro area. At the level of aggregated data for Luxembourg in 2021, the volume of cards issued has more than doubled between 2017 and 2021, jumping from 2.6m to 5.5m.

The volume of payment cards issued in Luxembourg may seem disproportionate to the country’s population, which stands at 646,864 inhabitants. It is an indicator of the country’s international openness, both from a financial and economic point of view.

Overall, for at least the last five years, the total value of payments sent has been split relatively equally between national and cross-border payments.

In particular, the interaction of payment flows with foreign countries is also reflected in the analysis of card payments made at payment terminals operated by Luxembourg providers. In 2021, these terminals recorded 76.1m payments made with cards issued in Luxembourg, compared with 554.6m payments made with cards issued abroad.

Luxembourgers spend abroad

In addition to payment terminals operated by Luxembourg providers, a proportion of payments made in Luxembourg are made on terminals operated by foreign providers. In 2021, only 20.3m payments passed through these foreign terminal networks.

While the Luxembourg economy appears to be heavily dependent on payment flows from abroad, statistics show that holders of Luxembourg-issued payment cards are used to spending their money abroad. In 2021, the total value of payments sent was split almost equally between domestic and cross-border payments.

Foreign dependence of the banking industry

Another highlight of the ECB statistics is that the volume of demand deposits jumped from 21m in 2017 to 33m in 2021. At the same time, the total value of loans granted by the central bank to banks has increased almost fivefold in the space of five years, from €5.6m in 2017 to €28m in 2021.

Paradoxically, the number of credit institutions established in Luxembourg has continued to decline. In 2017, there were still 145 banks in the country, whereas in 2021 there were only 125. However, the number of offices of these banks tends to remain relatively stable, at 262 in 2021, compared with 263 in 2017.

It should be noted that of the 125 banks present in Luxembourg, only 85 are legally incorporated, the others being branches of foreign groups (without legal personality in Luxembourg).

This article was published for the Paperjam + Delano Finance newsletter, the weekly source for financial news in Luxembourg. . Read the original French version of this article on the site.