Founded on 1 June 1998, the Luxembourg Central Bank (BCL) marked its 25th anniversary alongside the establishment of the European Central Bank in Frankfurt.
With the introduction of the euro on the horizon, the BCL commenced operations on 1 January 1999, in compliance with the European Union's requirement for each member state to have its own central bank. While traditionally central banks are responsible for printing money, the BCL's primary role today is to implement the monetary policy of the eurozone in Luxembourg.
The monetary policy for the eurozone is determined collectively by the governors of the central banks from the 20 member states at the European Central Bank in Frankfurt. Price stability, with a target inflation rate of around 2%, is the key objective of this monetary policy.
Interest rates serve as the primary tool for achieving this goal as they directly impact the issuance of loans and, consequently, the value of money. In times of economic downturn or banking instability, alternative measures such as debt buybacks have been implemented to stimulate credit and bolster economic activity.
Located on Boulevard Royal, near Côte d'Eich in the capital city, the BCL premises occupy the former site of the International Bank in Luxembourg (BIL), which held the privilege of money printing until 1999.
Gaston Reinesch has served as the governor of the BCL since 2013, succeeding Yves Mersch, who held the position since the bank's inception. Both governors have expressed concerns about the institution's limited capitalisation and have emphasised the BCL's independence.
In addition to its monetary responsibilities, since 2014, the BCL has also assumed the macroprudential supervision of the banking sector and money circulation. The growing workload and expanding balance sheet have necessitated organisational growth.
From employing 200 individuals in the early 2000s, the BCL's workforce has now reached 460 dedicated professionals.