Forging a team to manage euro’s smallest market

Date: 17/12/1998

By Renée Cordes

LUXEMBOURG has never set its own interest rates and now it never will.

Yet, from January, the newly established Luxembourg Central Bank (BCL) will manage the money market in the country the size of Ghent and have a seat on the European Central Bank's governing council.

For three-quarters of a century, the Grand Duchy's key lending rates were set by the Belgian National Bank as part of the customs union between the two countries, while the Luxembourg Monetary Institute acted as a banking supervisor.

With the advent of monetary union, everything will change. “The first order of business is getting ready for conversion,” said Mersch. “That also means getting a new institution working inside Luxembourg, which is not easy when you have no tradition.”

For him, the hardest task in setting up the new bank was creating a well-qualified and harmonious team of employees out of a mixture of Luxembourg civil servants, Belgians working for the Grand Duchy's central bank and others from private-sector banks.

The institution, which was only allowed to recruit 3&percent; of its workforce from any one bank, has benefited from the mergers of several large Luxembourg finance houses.

Mersch also had problems finding well-qualified information technology experts, and is less than 100&percent; satisfied with the bank's website. That is a priority for next year. Meanwhile, the bank has sent out a 200-page euro guide to every household in Luxembourg in at least three languages.

Today, the bank employs about 90 people at its headquarters in downtown Luxembourg, where staff are still unloading boxes and settling in, with another 120 banking supervisors operating throughout the country.

“This institution is set up and running,” said Mersch, “and is ready for 4 January.”