On 17 October 1945, the function Commissaire au Contrôle des Banques (Commissionner for the control of banks) was created. This date marks the beginning of the modern era of Luxembourg’s financial centre supervision. The timeline highlights the key events.
Law on the failure of credit institutions and certain investment firms. Creation, notably, of the Conseil de Résolution (CODERES, Resolution Board), a new body of the CSSF, exercising the duties and powers conferred on the CSSF as the resolution authority in Luxembourg.
Establishment of the Comité du Risque Systémique (Systemic Risk Committee, SRC) whose mission is to implement the coordination, by the authorities represented in the SRC (i.e. the Ministry of Finance, the Banque Centrale du Luxembourg, the CSSF and the Commissariat aux assurances), of the macroprudential policy in Luxembourg.
Publication of the Single Resolution Mechanism (SRM) Regulation whose objective is the orderly resolution of failing banks with minimal costs for taxpayers and the real economy.
Publication of the Single Supervisory Mechanism (SSM) Regulation conferring specific tasks on the European Central Bank (ECB) concerning policies relating to the prudential supervision of credit institutions. In this context, the ECB directly supervises significant institutions.
Creation of the European Banking Union in order to remedy the weaknesses of the banking sector in the euro area.
The European System of Financial Supervision(ESFS), arising from the lessons learned from the financial crisis, becomes operational. It is composed of the European supervisory authorities (ESAs) — namely the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) — and the national supervisors.
Publication of the Basel III Recommendations.
Law concerning the audit profession.
Global financial crisis
The Luxembourg State adopts rescue measures for the banks Dexia and Fortis.
The CSSF places three subsidiaries of Islandic banks in judicial liquidation (Glitnir Bank, Kaupthing and Landsbanki). The deposit guarantee scheme compensates in full the depositors, within the legal provisions applicable in Luxembourg.
Law on prospectuses for securities. The law sets out the requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a securities market.
Publication of the Basel II Recommendations.
Law establishing the Commission de Surveillance du Secteur Financier (CSSF) (financial sector supervisory commission) which is henceforth the competent authority for the prudential supervision of the financial sector undertakings.
Law relating to the supervision of securities markets.
Establishment of the Banque Centrale du Luxembourg (Luxembourg Central Bank)
Transposition into Luxembourg law of the second banking directive introducing, notably, a “European passport“ for banks. Part III of the law groups all the supervisory measures for credit institutions, defining notably that this supervision is henceforth made on an EU-basis by the supervisory authority of the Home Member State. Moreover, Article 41 specifies the scope of application of “bank secrecy”.
BCCI case which highlights the need to strengthen coordination among regulators.
First European Anti-money laundering Directive (91/308/EEC). Luxembourg is the first European country to transpose it into national law in 1993.
Law creating the Commissariat aux Bourses (Exchange Supervisory Commission) which takes over the supervision of stock exchanges.
Establishment of the Association pour la Garantie des Dépôts (AGDL) (Deposit Guarantee Association Luxembourg)
First law on anti-money laundering provisions related to drug trafficking.
Law on undertakings for collective investment. As the first country that transposed the UCITS I Directive into its national law, Luxembourg was, at that time, the only country offering the “European passport”. Many investment fund promoters domiciled their funds in Luxembourg and used the country as a distribution platform.
Basel I Accord on an international solvency ratio.
Creation of the International Organization of Securities Commissions (IOSCO).
Organic law on undertakings for collective investment.
Law establishing the Institut Monétaire Luxembourgeois (IML, Luxembourg Monetary Institute). The IML takes over all the competences conferred on the Commissaire au Contrôle des Banques by the legal and regulatory texts. The IML is a supervisory authority and a monetary authority.
Law organising the right of suspension of the Commissaire au Contrôle des Banques towards credit institutions and the suspension of payments, controlled management and winding-up of credit institutions. The law enhances the efficiency of the supervisory measures of the Commissaire au Contrôle des Banques and grants the power to impose sanctions.
Through the transposition of the first banking directive (77/780/EEC), Community law is actually introduced into national law by putting in place a regulatory regime for supervision. It enhances the position of the supervisory authority by confirming the role of the Commissaire au Contrôle des Banques in the procedure for the establishment of banks and appointing it as contact for the foreign supervisory authorities in the context of international cooperation between supervisory authorities. The law also represents a milestone in the consolidation of the legal banking infrastructure by introducing subordinated capital and credit register and confirming bank secrecy.
The European “Contact Group” is created: a forum gathering the European banking supervisory authorities, and predecessor of the European Banking Authority (EBA).
First EC Council Directive 77/780/EEC on the coordination of the laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions.
The Basel Committee is created. The Committee is notably in charge of ensuring the strengthening and stability of the financial system. Luxembourg is represented in this Committee by the Commissaire au Contrôle des Banques.
Grand-ducal decree on the supervision of investment funds. Through this regulatory text, investment funds are, for the first time, subject to supervision.
Establishment of a “Contact group” between European banking supervisors.
Many German banks start establishing themselves in the Grand Duchy, thereby strengthening its international position on the Euromarket.
Grand-ducal decree strenghtening the powers of the Commissaire au Contrôle des Banques by providing a legal framework to the supervisory practice that was in place since the end of WWII. The decree notably sets out the conditions for the access and exercise of certain professions and the conditions for the constitution and management of undertakings.
Establishment of the Committee of Governors of the EEC Central Banks. Luxembourg is represented in this Committee by the Commissaire au Contrôle des Banques.
1st Eurobond listed in Luxembourg. This instrument, intended to finance significant international credits, represents one of the main areas of development of the financial centre in the 1960s and 1970s.
as from 1960
Internationalisation of the financial centre.
Creation of the fonds commun de placement FCP Eurunion, the first Luxembourg investment fund.
as from 1949
French and Belgian institutions, withdrawn from the Luxembourg market during the occupation, move back to Luxembourg.
Bretton-Woods Agreement establishing, notably, the International Monetary Fund and the World Bank.
Grand-ducal decree establishing the function of Commissaire au Contrôle des Banques (Commissioner for the Control of Banks), whose role notably consists in ensuring the application of laws, decrees and regulations relating to financial institutions and their transactions.
Book and documentary
The year 2020 marks the 75th anniversary of prudential control and supervision of the financial centre in Luxembourg. On this occasion, the CSSF wished to contribute significantly to the research on these topics by publishing a book, as well as producing of a documentary.
The book “Surveillance, indépendance et intégrité. 75e anniversaire du contrôle prudentiel et de la surveillance de la place financière au Luxembourg” (Supervision, independence and integrity. 75th anniversary of prudential control and supervision of the financial centre in Luxembourg) was published in cooperation with the C2DH (University of Luxembourg). It is available in bookstores and at the Bibliothèque Nationale du Luxembourg, as well as at the Bibliothèque de la CSSF (access for in situ consultation only upon appointment through firstname.lastname@example.org).
The documentary “La surveillance de la place financière (1945-2020): une histoire inédite! D’Iwwerwaachung vun der Finanzplaz (1945-2020) – eng onerzielte Geschicht!” (The supervision of the financial centre (1945-2020): an untold story!) directed by Claude Lahr and produced by PTD-Paul Thiltges Distributions looks back on the key developments in prudential supervision in Luxembourg through testimonies of CSSF directors and agents, political leaders and stakeholders of the financial centre. The film is also a valuable testimony of the development of the Luxembourg financial centre. It is inserted in the book.