5 Euro – Grand Duchy of Luxembourg

In 2009, the Grand Duchy of Luxembourg, as a founding member of the Eurozone, was fully integrated into the single currency area, having adopted the euro (€) as its sole legal tender in 1999 (for electronic transactions) and 2002 (for cash). Consequently, the country did not have an independent national monetary policy or currency situation; its monetary fate was intrinsically tied to the decisions of the European Central Bank (ECB) and the broader stability of the euro. Luxembourg's financial sector, the cornerstone of its economy, was therefore directly exposed to the global financial crisis that had erupted in 2008, but through the channel of the euro and the European banking system rather than a domestic currency fluctuation.

The primary "currency situation" for Luxembourg in 2009 was defined by the euro's performance and the ECB's crisis response. While the euro initially weakened in the early part of the year amid the global recession, it remained a strong and stable currency overall. The key issue for Luxembourg was not exchange rate risk, but the severe liquidity crunch and solvency fears threatening its enormous banking sector, which held assets many times the country's GDP. The government's focus was on guaranteeing deposits and working with European partners to stabilize the financial system, all within the euro framework. Luxembourg also maintained its long-standing tradition of banking secrecy, which came under intense pressure from international bodies like the OECD during the crisis, adding a fiscal and reputational dimension to its challenges.

Thus, Luxembourg navigated 2009 from a position of monetary stability provided by the euro, which shielded it from the speculative currency attacks that hit smaller economies outside the Eurozone. The real economic battle was fought on different terrain: ensuring the survival of its cross-border financial centre, managing a significant recession and rising unemployment, and participating in coordinated EU-wide fiscal stimulus and financial rescue packages. The year underscored both the protection offered by the single currency during a global storm and the vulnerability of Luxembourg's specialized economy to a systemic banking crisis, all while setting the stage for future EU-wide regulatory reforms.