EconomyThe soundness of the financial system will support the...

The soundness of the financial system will support the recovery, says Banxico

The Mexican financial system has shown a solid position that would support the recovery of the economy, whose growth prospects have improved thanks to the start of vaccination against COVID-19, the Bank of Mexico (Banxico) said on Wednesday.

The institution reported in its financial stability report that, although since the beginning of 2020, the economy has faced considerable effects and high uncertainty due to the shocks of the pandemic, the outlook has improved due to more encouraging global economic prospects.

“The Mexican financial system has continued to show resilience and a generally solid position, characterized by capital and liquidity levels above regulatory minimums,” said Banxico. He added that the immunization campaign has favored growth prospects.

“The financial system would support the pace, scope and robustness that, from now on, observe said recovery,” he added in the report, although he warned that “the outlook is still uncertain, mainly due to the evolution that the pandemic may have.”

Last year, Mexican economic activity suffered the worst contraction since the Great Depression, falling by 8.5%, but recently Banco de México adjusted up its growth prospects for the end of 2021, raising it to 6% from 4.8 % previous.

The bank highlighted in its report on Wednesday that the financial markets stress index showed a downward trend in recent months.

Regarding the banking system, he said that it has sufficient capital and liquidity levels that would allow it, as a whole, to maintain levels above the regulatory minimums in the next three years.

However, some institutions may find it difficult to meet the capitalization requirements in some extreme scenarios simulated in the stress tests.

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