Escaping Original Sin

Escaping Original Sin


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

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