Your Weekly Recap for 13 - 17 March.

Here's 5 things you should know about at the end of this week:

  • The banking sector is going through the worst crisis since 2008
  • The Grand Duke reacts to staff mistreatment claims
  • The remaining coronavirus measures will be lifted
  • Russia and NATO's high risk cat-and-mouse game in European skies
  • Luxembourg residents have unhealthy eating habits



1. The banking sector is going through the worst crisis since 2008

  • Last Friday US regulators pulled the plug on Silicon Valley Bank in a spectacular move that sent global banking shares sputtering, as markets fretted over possible contagion from America's biggest banking failure since the 2008 financial crisis.

  • Authorities swooped in and seized the assets of SVB, a key lender to US startups since the 1980s, after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own.

  • According to experts from Luxembourg's financial sector, the recent collapse of three US American banks is not expected to have a significant impact on the Grand Duchy's financial sector.

What about European banks? - Credit Suisse acknowledged "material weaknesses" in its internal controls on Tuesday as the scandal-hit Swiss bank released its annual report, which was delayed following queries from US regulators regarding its books.

On Wednesday Credit Suisse customers in Geneva were not spooked by the bank's plunge on the stock exchange, believing the Swiss government would ride to the rescue before it could ever collapse.

On Thursday, this is exactly what happened: The bank eventually announced that it would borrow almost $54 billion from the Swiss central bank to reinforce the group after a plunge in its share prices.

The scandal-hit bank Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis. Analysts have warned of concerns over the bank's viability and the impact on the larger banking sector, as shares of other lenders sank on Wednesday. Experts in Luxembourg are not concerned about a domino effect.

Fears of contagion - European Central Bank governors met on Thursday, with fears over a widening banking crisis testing their resolve to raise interest rates again by a hefty half percentage point. It would be the sixth successive increase for the 20-nation currency club, leaving the ECB's three main rates 3.5 percentage points higher since July.

With stock markets tumbling and Credit Suisse shares hitting a record low on Wednesday, other lenders also saw dramatic drops.

On a good note, European stock markets rebounded slightly at the start of trading Thursday after embattled bank Credit Suisse won a big financial lifeline. Shares of embattled Credit Suisse skyrocketed as well after the announcement it would borrow up to $53.7 billion from the Swiss central bank, calming markets following the worst trading day in its history. Even though the bank is bouncing back, caution lingers.

Read also: 52.5 % of finance sector employees in Luxembourg want to change jobs



2. The Grand Duke reacts to staff mistreatment claims

  • During his state visit to Latvia, Grand Duke Henri explained that the newspaper story of a mistreated staff member at the Maison du Grand-Duc (House of the Grand Duke), which is responsible for all internal and external activities of the royal family, does not paint the full picture.

  • The weekly published a report on staff mistreatment, highlighting disagreements in the management of the House. In particular, Grand Duchess Maria Teresa came under public scrutiny in late 2022.

  • However, Grand Duke Henri did not give his own account of the situation. 

'Out of hand'-  According to the paper, the situation "got out of hand" during the weekend of 29 and 30 October, when the Grand Duchess wanted to try on clothes before a photo shoot for the wedding of her daughter, Princess Alexandra, in April 2023. Additional staff had to be called in as the maids and wardrobe staff reported being overwhelmed.

Lectured by the Grand Duchess? - On the following Monday, Maria Teresa summoned the Court Marshal and her personal assistants to lecture them about "poor organisation." The Land reports that the concerned staff members were not defended against these accusations.

Meetings with the PM - "I see the prime minister regularly and we talk about everything. I think there is really no major problem", the Grand Duke continued his defence. "I would say that the relationship with the government, between the House and the Ministry of State is normal. And that's excellent."

Infamous report - The House was set up after the release of the Waringo report, which highlighted earlier staff mismanagement at the Grand Ducal Court. If true, the suspected incident would not be the first one.

Speaking to the press after publication, the Prime Minister revealed that the Grand Ducal Court would be subject to 'far-reaching reforms', and that the government would implement all of Jeannot Waringo's recommendations in the domains of budgets, structure, and personnel management.

Read also:  "The monarchy's functioning must be reformed"


© Unsplash

3. The remaining coronavirus measures will be lifted

  • After a meeting on Monday morning, the Chamber's health commission reached a general consensus that it is time to lift the main remaining coronavirus measures given the current situation.

  • Mandatory wearing of masks might be maintained in the health and care sectors, but will no longer be regulated by law.

  • However, the measures relating to the vaccine will stay in place at least until the end of the year.

When?- It is expected to come into effect on 1 April the latest.

Luxembourg Hospital Federation welcomes the change - "Working with a mask for three years was unreasonable and exhausting. I think this change is welcomed by all health personnel," says Dr Philippe Turk, President of the federation.

Nursing and caregiving staff - Residents of care homes have not been required to wear masks for a long time already, but this draft bill also allows health personnel to remove them.

Facilitating communication - Masks made speaking and hearing very difficult, care home residents say. It became harder to recognise and remember faces, and those employees starting during the pandemic were never 'fully' seen.

Read also: 
What has Luxembourg learned from the Covid-19 pandemic?



4. Russia and NATO's high risk cat-and-mouse game in European skies

  • A Russian fighter jet on Tuesday dumped fuel on an American drone over the Black Sea then collided with it, causing the drone to crash, the US military said.

  • Russia denied that it had deliberately brought the drone down. But it was the first such incident between Moscow and Washington since Russia invaded Ukraine in February.

  • NATO diplomats in Brussels confirmed the incident, but said they did not expect it to immediately escalate into a further confrontation.

Click here to see video footage that was released by the US on Thursday.

Risk to civillian airliners - Moscow has not hesitated to send "messages" in recent years by sending its military planes not far from the sovereign airspace of European countries.

'Sky police' - Since the annexation of Crimea by Russia in 2014, NATO eastern flank members including the three Baltic States, Poland, Bulgaria and Romania, benefit from a reinforced so-called "sky police" from NATO.

Since the start of the invasion of Ukraine, aircraft have been sent over the Black Sea on a daily basis, all while taking care not to violate Russia's sovereign airspace, which extends up to 12 nautical miles from the coast.

Mostly over the Baltic Sea - In 2022, NATO air forces across Europe scrambled around 570 times to intercept Russian military aircraft approaching Alliance airspace, according to NATO.

Nearly all aerial encounters were safe and professional - "On a few occasions, Russian military aircraft conducted risky manoeuvres near unarmed allied reconnaissance flying in international airspace," an unnamed NATO official said.

Washington initiated call with Russia - On Wednesday Defense Secretary Lloyd Austin told his Russian counterpart Sergei Shoigu that US aircraft will fly "wherever international law allows". Maintaining communication with Russia is key, the Defense Secretary emphasized, saying that this should help preventing miscalculation going forward.

On the other hand - It is a return to the situation at the end of the Cold War when Western air equipment was destroyed occasionally," a French expert explained.

In other NATO news: Finnish president Sauli Niinisto is meeting Turkish President Recep Tayyip Erdogan on Friday, with Ankara signalling readiness to approve Finland's NATO bid.

Read also: Fuelled by Ukraine, European arms imports double in 2022


5. Luxembourg residents have unhealthy eating habits

  • A cardiologist criticised Luxembourgers' eating habits at a conference last Friday arguing that Luxembourg residents "generally eat badly."

  • "Too much fat, too much sugar, and too many calories," that warrant an urgent change from a medical perspective.

  • The cardiologist labelled the trend as an "epidemic" comparable to the one in the United States and made the case that too many people in Luxembourg are overweight and therefore at greater risk of becoming ill.

Fundamental change of eating habits is needed - Although a greater number of people have become more aware of their eating habits and, for instance, reduced their meat consumption, Dr Müller says more has to be done.

Organisation helps argues Chef Carlo Sauber -  "As a chef, I say this is an issue of organisation instead. Appliances such as pressure cookers, steamers, freezers and other gadgets make it possible for people to have a healthy, balanced diet."

Healthy diet is tied to financial means - According to Caritas spokesperson Carole Reckinger, "a growing number of people in Luxembourg are at risk of facing poverty, meaning that their grocery budget is continuously shrinking and that does play a role. Healthy foods are sometimes much more expensive than ready-made meals, for example, so another factor to take into consideration is time."

Cost of living crisis in Europe - The UK government is grappling with spiralling energy costs that have fuelled double-digit inflation, with many basic food staples jumping in price. Sweden is hit by the highest inflation in more than 30 years and poised for recession, visible signs of poverty are mounting amid rising inequality.

Read also:  Number of overweight adolescents in Luxembourg more than doubled


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