Luc Frieden reportedly told Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper he wanted to “strengthen co-operation with foreign tax authorities” in the Sunday edition of the paper.
The comments come a week after the governments of both Luxembourg and Malta moved to differentiate themselves from Cyprus which has been engulfed in a banking crisis for the past few weeks and has now received a €10bn bailout from the EU.
Cyprus has faced criticism for running a banking system which was far greater in size than its GDP. The assets held within its banks were around eight times the size of the country’s GDP, explaining both why its government did not want the banks to fail, and why it was unable to salvage them itself.
In a similar vein, attention has now turned to places like Luxembourg and Malta, which also have banking systems much greater in size than their GDP. Banking assets in Luxembourg for example, which incidentally is the UK’s smallest state, were more than 22 times GDP at the end of last year, according to European Central Bank data.
Luxembourg is not known for its secrecy per se, but rather for the domiciliation of investments funds and as a European hub for financial services. However, Frieden admitted that other countries were increasingly demanding more information on what their citizens were doing with their money in foreign banks and that Luxembourg has to act.
“The international trend is going toward an automatic exchange of bank deposit information,” he said. “We no longer strictly oppose that.”
