The backbone of Luxembourg's economy is the services sector. Financial services, communications, and media services form the core of this sector. Currently home to over 200 banks and 9,000 holding companies, Luxembourg has experienced the biggest growth in recent years in this sector. Employing 20,000 people, the banking sector accounts for 15 percent of the nation's GDP, while the services sector overall contributed 69 percent of the GDP in 2000.
During the 1970s, Germany and Switzerland adopted legislation that made it difficult for non-residents to deposit money in their national banks. However, Luxembourg maintained laws that encouraged foreign investment, and these led to its emergence as a banking center where foreign individuals and companies could easily deposit funds. In the 1980s, this trend accelerated as the country's banks diversified into a wide array of other financial services. By 1994, the banking sector was worth over 17.6 trillion francs. The largest banking group is Cedel, which had an operating income of US$587.6 million and returned profits of US$92.1 million in 1999.
Well into the 1980s, the insurance business in Luxembourg was concentrated on local markets, but EU economic integration opened the markets of other nations to companies in the Grand Duchy. This led to a doubling of the insurance companies by 1993. Besides life and other personal insurance, Luxembourg's companies have gained a place for themselves in maritime insurance, which now accounts for 39 percent of non-life-insurance policies. Including independent insurance brokers, there are as of 2001 approximately 6,200 people employed in insurance.