Europe cannot afford to delay reforms for another generation, with Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier’s (CSSF) director-general Claude Marx insisting that tax harmonisation and a genuine savings union are overdue by decades.
In its annual report, the CSSF warned that Europe will need to strengthen its defence capabilities, requiring considerable funding in addition to the need to finance the sustainable and digital transitions. This represents more than €1 trillion per year, it highlighted.
Public money will not be enough, it said, and private capital must be mobilised through deeper capital markets. Marx stated in the report that Europe cannot wait “another 33 years” for reforms such as tax harmonisation or a genuine savings union.
More than one in five new securities prospectuses in Luxembourg last year contained ESG elements, according to Luxembourg’s financial regulator Commission de Surveillance du Secteur Financier (CSSF), which has also begun dedicated climate-risk inspections in banks.
The CSSF also highlighted that the EU’s review of SFDR raises the prospect of clear product labels and a simpler framework for investors, and it has already built ESMA’s anti-greenwashing rules into its own handbook.
CSSF also set out its digital finance agenda. In 2024, the CSSF imposed fines worth €11.07 million, including a €3 million penalty against BGL BNP Paribas for non-compliance with professional obligations related to anti-money laundering and counter-terrorist financing.
With its four blockchain laws, to be supplemented if necessary, Luxembourg already has a solid regulatory framework and should serve as a “pilot” in this field for the EU. The CSSF noted that a number of asset managers are considering tokenising fund units. The regulator has also invited early engagement on Markets in Crypto-Assets Regulation licensing.
ELTIFs and private assets encompassed by Funds Europe Luxembourg conference
Securitisation vehicles grew to €44.4 billion, up almost €15 billion in a year driven by synthetic repackaging. Pension fund assets stood at €1.29 billion, with one cross-border fund operating affiliates in Germany and Portugal.
“It is undeniably the right time to boost capital markets in the EU and reverse Europe’s loss of competitiveness,” it stated.
The shift in US economic policy and the erosion of multilateralism are warning signs for Europe, according to the regulator. Globalisation may give way to growing fragmentation and new blocs such as the BRICS, with 3.5 billion people versus 334 million in the US and 450 million in the EU.
“In the current uncertain geopolitical environment, the stability and predictability of Luxembourg politics, combined with the AAA rating, are undoubtedly a strength,” stated the CSSF.
