25 Euro (Central Bank of Luxembourg) – Grand Duchy of Luxembourg

In 2023, the Grand Duchy of Luxembourg’s currency situation remained firmly anchored within the Eurozone framework, utilizing the euro (EUR) as its sole legal tender. As a founding member of the European Union and an early adopter of the single currency in 1999, Luxembourg benefits from the stability and credibility of the European Central Bank's (ECB) monetary policy. This integration shields the highly open, service-based economy from exchange rate volatility and facilitates seamless trade and financial flows with its key partners, notably Germany, France, and Belgium. The nation’s financial sector, a cornerstone of its economy, operates with deep efficiency within this unified monetary system.

The year was marked by Luxembourg navigating the ECB’s concerted efforts to combat high inflation across the Eurozone through a series of interest rate hikes. While necessary to cool the economy, these tighter monetary conditions presented a nuanced challenge for Luxembourg’s housing market, where high levels of household debt and elevated property prices made borrowers more sensitive to rising borrowing costs. Nevertheless, the country’s robust fiscal position, AAA credit rating, and strong banking sector provided significant buffers against these headwinds, ensuring overall financial stability.

Looking beyond domestic circulation, Luxembourg’s role as a premier global financial center meant its currency landscape was heavily influenced by international finance, including fund administration, private banking, and fintech innovations. The stability of the euro was paramount in maintaining confidence in these cross-border activities. Furthermore, 2023 saw continued exploration of digital finance, with the nation actively participating in Eurosystem discussions on a potential digital euro, aiming to future-proof its currency framework while ensuring it remains aligned with broader European financial integration and innovation goals.