Banxico Says Mexico’s Financial System Remains Resilient

Mexico’s central bank has found that the country’s financial system remains resilient and stable despite the challenges posed by the complex global economic landscape.

In a recent financial stability report, the Bank of Mexico (Banxico) highlighted the robust position of the country’s banking system, emphasizing its ability to withstand stress and maintain liquidity, Reuters reported Wednesday (Dec. 6).

Banxico said the banking system in Latin America’s second-largest economy has shown resilience in stress tests, highlighting its strong liquidity position, and concluding that it is well-positioned to handle episodes of stress greater than those experienced in the past, according to the report.

Banxico Governor Victoria Rodriguez discussed the Banxico’s projections for inflation, stating that the expected 20% increase in the minimum wage, set to take effect in January, has already been factored into its considerations, the report said.

The central bank is closely monitoring inflation and has indicated that if inflation continues to decline in line with forecasts, it may start discussing a reduction in the record-high interest rate early next year, per the report. The January data will be particularly important in determining the course of action.

Banxico noted that the financial position of households was slightly below the levels observed six months ago, according to the report. Credit for the non-financial private sector has slowed its pace of growth. Despite a slight increase in consumer bank credit delinquency over the period, it remains low overall.

Banxico identified several risks to the country’s financial stability, the report said. These include the possibility of a further global economic slowdown and an unexpected ratings downgrade for Mexico’s sovereign debt or state oil firm.

The report also highlighted the risks posed by cyberattacks stemming from conflicts in Ukraine and the Middle East, per the report. To address these risks, the central bank announced that it would maintain its cyber alert level at “yellow.”

PYMNTS Intelligence has found that cards are displacing cash for use by in-store shoppers in Mexico and may provide a digital payments on-ramp that will boost online and omnichannel purchases.

The use of cash by in-store shoppers is down 23% year over year, according to the “2023 Global Digital Shopping Index: Mexico Edition,” a PYMNTS and Cybersource collaboration.