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IPS152 Paul F.

IMF Task Force final report on Special Purpose
Entities (SPEs): Compilation issues and
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implementation in Luxembourg
Paul Feuvrier
Banque centrale du Luxembourg.

Abstract
The final report of the IMF Task Force on Special Purpose Entities (SPEs)
provides a comprehensive definition, which refers to both Business Statistics
(“no or little employment”) and Balance of Payments (“transactions with non-
residents”) concepts. Yet it also takes into account criteria related to the
competitiveness of the jurisdictions hosting SPEs: The SPEs are institutional
units established for specific purposes including for instance to “grant their
owners access to capital markets or sophisticated financial services”. How to
identify institutions based on such non-standard criteria? The IMF report
fortunately also includes a typology, which is an excellent starting point to go
through the various Luxembourg SPEs business models. Luxembourg SPEs are
mostly Captive Financial Institutions. The most commonly observed pattern is
that Multinational Enterprises (MNEs) do not establish a single but instead a
network of interrelated resident entities, characterized by complex ownership
chains, to channel funds through Luxembourg. Some of these entities issue
debt securities on behalf of the group, and most only have loans and equity
(vis-à-vis affiliates of the group) on both sides of the balance sheet. As a
consequence of this “channeling” function, the contribution of each MNE and
therefore to SPEs in general, to Luxembourg’s net international investment
position (i.i.p.), should theoretically be rather small.

Keywords
External Statistics, Financial Account, Foreign Direct Investment, Portfolio
Investment

1. Introduction
The second section of this note delineates which Luxembourg institutions
are SPEs in accordance with the IMF Task Force’s definition and the third
section in which category they fall (typology). Section 4 presents BCL’s survey
strategy, editing system and the functional category of some financial

This presentation should not be reported as representing the views of the BCL or the
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Eurosystem. The views expressed are those of the author and may not be shared with other
research staff or policymakers in the BCL or the Eurosystem.
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