Central Bank says resilient Mexico’s financial system will help economic recovery

The national flag flutters atop the Bank of Mexico building in downtown Mexico City January 23, 2015. REUTERS/Edgard Garrido

MEXICO CITY (Reuters) – Over a year into the COVID-19 pandemic, Mexico’s financial system has demonstrated resilience and has a solid overall position that will contribute to the economic recovery, the central bank’s financial stability report said on Wednesday.

Bank of Mexico’s stress tests of the financial system reveal the Mexican banking system as a whole has the needed levels of capitalization to allow it to face six different simulated scenarios for the economy in the report.

However some banking institutions, representing a low percentage of system’s total assets, could have difficulty maintaining minimum levels of capitalization required in certain adverse scenarios, said the biannual report.

“The Mexican financial system has continued to show resilience and a generally solid position, characterized by capital and liquidity levels above the applicable regulatory minimums,” said the bank.

The Bank of Mexico said the outlook for Mexico’s economy has improved in line with better prospects for world economic growth. But it said that outlook was uncertain due to the evolution of the pandemic and the possibility of an uneven recovery.

Mexico’s economy shrank by some 8.5% last year, the sharpest slump since the 1930s. Mexico is expected to recoup some of that in 2021, with the government forecasting 6.5% growth.

(Reporting by Anthony Esposito; Editing by Cynthia Osterman for Reuters)

Source: Reuters