November 1, 2006
Mexico's financial system has undergone a profound transformation in the last few years. Curbing macroeconomic risk and sponsoring institutional change has paid significant dividends. Tight fiscal discipline coupled with lower inflation and a floating exchange rate effectively reduced vulnerabilities and prevented the accumulation of imbalances. Pension system reform in the late 1990s was complemented by a series of legal changes to the insurance and mutual fund industries that, together with other reforms in securities markets, stimulated rapid development in the local institutional investor base.
Private financial savings rose to 54% of GDP from 42% between 2000 and 2006, and a fast expan
Mexico's shift to domestic markets points the way for emerging economies to cast off the original sin of too much overseas debt. Talking to international investors has been key. By Gerardo Rodríguez*