Mexican leaders eye banking sector reforms
A banking sector overhaul could provide a wide variety of benefits to Mexico, and the nation's leaders are discussing several options that may help the country's economy.
According to The Associated Press, Mexican officials are actively pursuing solutions to make credit readily available to residents. Additionally, these administrators are studying ways to make credit cheaper, which could affect Mexican citizens who currently work in the U.S. and send money to family members in their homeland.
While the economic recession of the late 2000s affected many nations, Mexico's financial crisis of 1995 had far-flung effects that still impact the country today. During the crisis, many of the nation's banks nearly went bankrupt, but federal leaders provided short-term financial assistance. Several larger Mexican banks were later sold to foreign investors, and five of these financial institutions have dominated the nation's banking segment since that time.
"When the banking sector was opened to foreign firms, [Mexican leaders] thought it would increase competition, but [these banks] didn't compete," economic analyst Rogelio Ramirez told the news source. "What we need is a reform to have them compete more and make the market more attractive, but the banks are happy to just issue credit cards."
Banking sector changes could provide additional support to the Mexican economy
Agustin Carstens, Mexico's central bank governor, told Reuters that banking sector reforms could have immediate effects on Mexican residents. In fact, boosting credit across the nation may add 0.5 percentage points to the Latin American economy within two to three years.
Increasing competition among banks could also encourage these financial institutions to provide additional loans to Mexican citizens. Meanwhile, The Washington Post reports that these banks may develop incentives for mid-sized businesses that list their shares on the stock market, which could deliver a substantial boost to the nation's economy.
"The [objective] is … for banks to lend more, and more cheaply," Mexican President Enrique Peña Nieto told the news source. "Credit is a key input for growth."
Mexican Bankers Association officials said that they would need to study the proposed banking sector reforms to determine exactly how Mexican residents would be affected. However, these leaders stated that they agreed with the goals of the reforms, but specific measures must be followed to ensure that Mexican residents will enjoy the benefits of various economic changes.