From Tradition to Innovation: Transition of the Financial Industry
Singapore and Luxembourg have similar transformative histories, with both countries emerging as global financial centres from modest beginnings. Luxembourg has shifted from an industrial economy to a satellite communications and finance powerhouse, while Singapore evolved from a refining and shipping hub to an investment hub for Asia. Both nations are nimble, innovative, and interconnected, making them critical players as finance becomes more digital and personalised.
The financial industry's rapid transformation reshapes money management, investments, and supervision. As a small but influential country, Luxembourg emphasises the importance of competitiveness in a fast-changing landscape. Both nations promote openness and international collaboration, linking global capital, ideas, and innovation.
The new age of finance, driven by the free flow of data, boosts transparency, personalisation, and accessibility. In the EU, legislative initiatives are promoting open finance, merging banking, insurance, asset management, and payments into a unified network. Luxembourg is an advocate for interconnected global markets, welcoming external investments to boost competitiveness.
Key Priorities for Luxembourg's Government:
- Investment Transformation: Luxembourg is a leading global investment hub, second only to the US, channelling capital to key sectors like renewable energy and digital infrastructure worldwide. Open finance, powered by AI, will revolutionise investment funds, making them real-time and tailored to individual preferences. The rise of blockchain and tokenization is also set to democratise private assets, making investments more accessible and liquid. Luxembourg supports this evolution with blockchain legislation, ensuring legal clarity and innovation.
- Payments Transformation: The payment industry is evolving, with real-time payments, blockchain, and digital wallets making transactions faster, more secure, and globally accessible. Luxembourg's role as a European hub for payment giants puts it at the forefront of these changes. Future innovations will make payments seamless, regardless of geography, supported by blockchain and stablecoins. Regulations like MICA in the EU ensure stability and security for these digital payment systems.
Challenges and Opportunities: The financial transformation is not without risks, including geopolitical tensions, market volatility, and cyber threats. However, strong regulatory frameworks in Europe and Singapore are essential to maintain stability. Sustainability remains a core principle, with Luxembourg leading in green bonds and sustainable investment funds. The future of finance is bright, interconnected, and innovation-driven, requiring a balance between opportunity and responsibility. Tradition and innovation must co-exist, making innovation the new tradition. Together, there is a path to a prosperous and secure financial future.
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Speaker:
- H.E. Gilles Roth, Minister of Finance, Luxembourg