Banxico in disagreement with the foreign exchange law

The Bank of Mexico (Banxico) criticized the new law on currencies approved yesterday by the Senate of the North American country, by which it is proposed that only foreign notes and coins may be part of the international reserves, while international currencies surpluses that cannot be repatriated to their country of origin will be purchased by the institution.

In a statement issued, the Aztec institution detailed that the initiative proposed by the Morena formation foresees that this be achieved “by imposing on the Bank of Mexico the obligation to buy those notes and coins captured by the bank and that they cannot be repatriated.”

In this context, the agency pointed out that the project will cause “substantial” impacts and risks without fulfilling the objective that said initiative seeks to achieve.

In fact, the statement issued by Banxico warns that the competent authorities for the prevention of money laundering “coincide in the effects that the project would cause in the standards that the financial system must establish when operating with foreign banknotes and coins, which are considered high risks, as well as the contagion of said risks to the central bank.”

Specifically, the Mexican Senate amended articles 20 and 34 of said law, to which it added articles 20 Bis and 20 Ter on the matter of raising foreign currency in cash. Thus, the currencies that may be part of the reserve will be foreign cash (captured by credit institutions) that cannot be repatriated to its country of origin.

The excess foreign bills and coins that the credit institutions collect will be repatriated to their country of origin, but those that cannot be repatriated will be bought by Banxico.

K. Tovar

Source: Forbes