Weekly Report - 16 January 2014 (WR-14-02)

MEXICO | Financial reform. On 9 January President Enrique Peña Nieto promulgated the financial reform package approved by congress in September last year [WR-13-36]. The reform, part of Peña Nieto’s ambitious economic reform agenda, is aimed at increasing the level of credit available in the local market. In promoting the reform, the Peña Nieto administration pointed out that despite the fact that Mexico’s banking sector is one of the most solid in the world, boasting high levels of capitalisation, reserves and liquidity, the level of credit offered to the general population was comparatively low: the level of credit available to the private sector in Mexico amounts to 27% of GDP, lower than the regional average of 47% of GDP. Thus the government proposed a series of changes to the existing legislation governing the banking sector aimed at encouraging banks to provide more and cheaper credit. These changes include the provision of greater guarantees to lenders against the risk of non-payment by borrowers; increasing competition in the sector; and improving its regulation.

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