Mexico’s financial system is safe from the problems with liquidity facing banks in other countries after the collapse of Silicon Valley Bank because its lenders have weathered crises before and have behaved in a cautious manner, the country’s finance minister said.
(Bloomberg) — Mexico’s financial system is safe from the problems with liquidity facing banks in other countries after the collapse of Silicon Valley Bank because its lenders have weathered crises before and have behaved in a cautious manner, the country’s finance minister said.
Mexican banks haven’t overextended themselves and its central bank didn’t cut rates close to zero and then keep them there, helping to insulate Mexico to some degree from the issues rattling investors in other parts of the world, Rogelio Ramirez de la O said in an interview Thursday with El Financiero Bloomberg TV.
“We don’t have to worry about systematic contagion. I don’t doubt that some Mexican bank has links to that bank or another that has problems in the US or Europe, but the whole Mexican system does not have an issue,” he said at an annual banking convention held this year in Merida, Mexico.
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Mexico’s Finance Ministry has had to adjust to rising interest rates as Banco de Mexico, as the central bank is known, has pushed up borrowing costs to a record high 11%. The median estimate of economists surveyed by Bloomberg expect Banxico to raise rates at its next two meetings.
Ramirez also said that higher interest rates in Mexico had weighed on the government budget, but that officials had been able to cover the expense.
“It does affect us, but until now it’s been a cost that we have absorbed within the budget with having to look for additional financing beyond the budget approved by the congress,” he said. “I can’t say it was a success, but it’s well absorbed.”
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