The European common currency is making Luxembourg more attractive to Japanese financial institutions, Henri Grethen, Luxembourg's economic minister, said Tuesday in Tokyo.

Henri Grethen

Euro bills and coins will start circulating in 12 of the 15 European Union countries next Jan. 1. The euro is currently used only for interbank transactions.

"Luxembourg is an excellent location for Japanese banks," Grethen said of the country, Europe's third-largest financial center, in the geographical center of the euro zone.

The euro's widespread introduction will also benefit Luxembourgers as the current problem of many different currencies in circulation, such as the German mark and the French franc, will be eliminated, he said.

"We always keep several currencies in our pockets," he said. "From Jan. 1, 2002, we will have one single currency. It will make things easier."

Grethen traveled to Japan for the 25-nation Asia-Europe Meeting that ended in Kobe on Sunday and to hold discussions with Japanese companies that currently operate in Luxembourg.

Satisfied with Japan-Luxembourg relations, Grethen hopes the two countries will develop closer economic ties in both the industrial and service sectors and particularly in the financial sector.

Besides location, Grethen said, Luxembourg is also favorable for Japanese companies because no discriminatory measures against foreign companies are taken.

Luxembourg exports 80 percent of domestically produced goods, which means the country must maintain its competitive edge and cannot afford to have protectionist policies, he said.

Luxembourg's gross domestic product grew by 8.3 percent last year, the highest among EU member countries, he said.