Bank of Mexico touts financial system’s stability despite economy’s weakness

MEXICO CITY (Reuters) – The Mexican financial system maintains a solid and resilient position despite global and domestic risks and the “notable weakness” of the economy, the Bank of Mexico said on Wednesday in its biannual financial stability report.

In the report, the central bank credited robust institutions for the stability of the financial system in Latin America’s second-largest economy, noting that Mexico’s banking system has capital and liquidity levels above regulatory minimums.

“While the vulnerabilities and risks identified for financial stability are generally considered limited, unexpected or severe shocks could affect its proper functioning,” Banxico, as the central bank is known, noted in the report.

Mexican markets have experienced considerable volatility in the year’s second half, amid developments stemming from elections in Mexico and top trading partner, the United States.

Nevertheless, markets have behaved in a “relatively ordered” manner despite the volatility, particularly of the peso, which has depreciated in recent months.