2.5 Euro – Grand Duchy of Luxembourg

In 2021, the Grand Duchy of Luxembourg, as a founding member of the Eurozone, continued to use the euro (€) as its sole official currency, a status it had held since the currency's physical introduction in 2002. The currency situation was therefore characterized by stability and full integration into the European Central Bank's (ECB) monetary policy framework. Luxembourg's financial sector, a cornerstone of its economy, operated seamlessly within this single currency area, facilitating cross-border banking and investment services for which the country is renowned. The euro provided price transparency, eliminated exchange rate risk with key trading partners, and underpinned the nation's highly globalized and open economy.

The year was nonetheless marked by the ongoing economic repercussions of the COVID-19 pandemic, to which the ECB's monetary policy was a critical response. Luxembourg, like all member states, benefited from the ECB's aggressive stimulus measures, including historically low interest rates and large-scale asset purchase programs (PEPP). These policies aimed to ensure liquidity, support borrowing, and maintain price stability across the bloc, indirectly shielding Luxembourg's vital financial and export-oriented sectors from more severe contraction. Domestically, the government's fiscal support packages, deployed in euros, worked in tandem with these ECB measures to cushion the economic and social impact.

Looking forward, 2021 was also a year of strategic anticipation for the future of the euro. Luxembourg, as a major financial hub, actively participated in EU discussions on key projects like the digital euro initiative and the deepening of the Capital Markets Union (CMU). These efforts aimed to strengthen the international role of the euro and enhance the resilience of the Eurozone's financial architecture. Thus, while the day-to-day currency environment was one of settled normality, the policy focus was on adapting the single currency framework to new digital and geopolitical challenges in the post-pandemic era.