2 Euro (Erasmus Programme) – Grand Duchy of Luxembourg

In 2022, the Grand Duchy of Luxembourg, as a founding member of the Eurozone, continued to use the euro (€) as its sole official currency. This monetary integration, established in 1999 (with banknotes and coins introduced in 2002), meant Luxembourg's national monetary policy was fully delegated to the European Central Bank (ECB). The year was therefore defined by Luxembourg navigating shared Eurozone challenges rather than pursuing an independent currency policy. Key domestic financial actors, including the Central Bank of Luxembourg (BCL), operated within the Eurosystem framework, focusing on financial stability, banking supervision, and contributing to the ECB's decision-making processes aimed at controlling record-high inflation.

The primary monetary background for Luxembourg in 2022 was the ECB's decisive shift away from the ultra-loose monetary policy that had characterized the previous decade. Confronting inflation that surged to a historic 8.2% annual average in the Eurozone, driven by soaring energy prices and supply chain disruptions post-pandemic and exacerbated by the war in Ukraine, the ECB initiated a series of interest rate hikes starting in July. For Luxembourg's highly financialized and open economy, this meant tighter borrowing conditions, impacting mortgages, business investment, and government debt servicing costs, while also aiming to cool inflationary pressures affecting households and businesses.

Despite the shared currency, Luxembourg's unique economic profile shaped its experience of the 2022 currency environment. Its large financial sector, high proportion of cross-border workers, and status as a real economy with significant industrial and service exports meant it felt both the benefits of euro stability and the constraints of a one-size-fits-all policy. Domestically, discussions focused on mitigating inflation's impact through targeted fiscal measures, such as indexation of wages and social benefits—a key national mechanism to preserve purchasing power. Thus, while the currency itself was a stable given, its management and economic consequences formed the critical financial backdrop for the nation throughout the year.