FINANCIAL SERVICES ADVISOR a PUBLICATION of the DIALOGUE January 28-February 10, 2021

LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org January 28-February 10, 2021

BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión Will New Legislation New Itaú CEO Sets Pablo Barahona President & COO, Sights on Chile, Global Retail Markets West, Liberty Mutual Group Weaken the Bank of Argentina Units Felipe Carvallo Milton Maluhy, who took over Vice President - Analyst Feb. 2 as chief executive officer Latin America Banking Mexico’s Autonomy? Moody’s Investors Service of Brazil’s Itaú Unibanco, said he will seek options to improve Richard Child the bank’s results in Chile and CEO, Mattrix Group Argentina. Page 2 Michael Diaz Jr. Partner, Diaz, Reus & Targ REMITTANCES Ernesto Fernández Holmann Chairman of the Board, Mexico Receives Ayucus $40.6 Billion in Rich Fogarty Managing Director, Remittances in ‘20 Alvarez and Marsal Mexico received $40.6 billion Desiree Green Mexico’s government is devising an alternative to controversial legislation that has been criti- in remittances, a record level, Vice President, cized as infringing on the central bank’s autonomy. // File Photo: Mexican Government. last year. The amount was up 11 International Government Affairs, percent as compared to 2019, and Prudential Financial it defied expectations that remit- Mexico’s government is working on devising a banking prod- Laura Güemes Cambras tances would decline because of Transactions Attorney, uct that would help migrant workers change their dollars to the Covid-19 pandemic. Holland & Knight pesos, Finance Minister Arturo Herrera said recently. The Page 3 Earl Jarrett Chief Executive Officer, Q product would be an alternative to controversial legislation The Jamaica National Group that would require the central bank to accept excess dollars that Mex- BANKING Thomas Morante ican banks are unable to repatriate to the United States due to mon- Attorney Bradesco Reports Carlton Fields ey-laundering controls. Ruling party lawmakers back the bill, but critics 2.3% Rise in Profit Manuel Orozco say it would violate the central bank’s autonomy and potentially expose Senior Fellow, for Fourth Quarter it to money laundering. Is the existing legislation as dangerous as its Inter-American Dialogue Brazil’s Banco Bradesco reported Adalberto Palma-Gomez opponents suggest, and what would it lead to if passed in Congress? $1.27 billion in net income for Senior Partner, Would the alternative, which would allow Mexicans to open accounts the fourth quarter, exceeding Proxy, Gobernanza Corporativa at the Banco del Bienestar development bank, solve the problems that analysts’ estimates. CEO Octavio Rodolfo Pittaluga de Lazari said 2021 will be a “year Adjunct Professor, some face in converting dollars to pesos? How would the resolution of of recovery.” Florida International University the debate affect the value of the Mexican peso? Page 2 College of Law Fabian Saide Founder, CEO and President, Jonathan Heath, deputy governor at the Bank of Mexico: Paykii “About 10 years ago, the Mexican government enacted a Roberto Teixeira da Costa Founder & Board Member Emeritus series of regulations aimed at curbing money laundering CEBRI operations. As a result, the dollar-cash market was limited Mario Trujillo A CEO, and separated from the digital or electronic dollar market. Incentives were DolEx Dollar Express introduced to minimize the use of cash, which is where most money laundering took place. Consequently, the cash market diminished nearly 76 percent over the next 10 years. This has led to different supply/demand channels in both markets. The supply of cash dollars comes mostly from tourism and illegal operations (mostly narcotics), together with a reduced number of remittances. Today, almost 99 percent of family remittances De Lazari // File Photo: City of Curitiba. Continued on page 3

BANKING NEWS income for the quarter amounted to 5.29 billion NEWS BRIEFS reais ($991.9 million). Net interest income New Itaú CEO Sets fell 9.5 percent year-over-year, primarily due Bassols Tapped as to a shift in the bank’s loan portfolio toward Mastercard’s Country Sights on Units in lines that carry lower amounts of risk, Reuters reported. Itaú also said that its cost of credit Manager for Brazil Chile, Argentina increased 3.8 percent in the quarter, year-on- Mastercard announced Jan. 29 that it had year, to 6 billion reais. However, the bank said named Estanislau Bassols as its country The new chief executive officer of Brazilian that increase was due to a provision related to manager for Brazil. Bassols, a former chief lender Itaú Unibanco, Milton Maluhy, said on one company. executive officer of SKY Brasil, will take on the Feb. 2 that he will focus on facing the chal- new role at Mastercard as of Feb. 15. He will lenges posed by financial start-ups, exploring Bradesco Reports report to João Pedro Paro Neto, Mastercard’s options to boost the bank’s results in Chile president for Brazil and the Southern Cone. and Argentina and handling the uncertainties 2.3% Rise in Profit “Brazil’s strength and growth over the years has wrought by the Covid-19 pandemic, Reuters been instrumental for the company worldwide,” for Fourth Quarter Paro Neto said in a statement.

Banco Bradesco, Brazil’s second-largest private-sector lender, on Feb. 3 reported 6.8 Founder of Mexico’s billion reais ($1.27 billion) in recurring net income for last year’s fourth quarter, a 2.3 Quálitas Dies at 73 percent rise as compared to the same quarter Joaquín Brockman Lozano, founder of Mexican a year earlier. The report exceeded analysts’ auto insurance firm Quálitas, has died at the expectations for 5.55 billion reais, according to age of 73, Explica reported Jan. 30, citing a a consensus estimate of analysts in a Refinitiv Maluhy // File Photo: Itaú Unibanco. company statement. “The members of the poll, Reuters reported. Bradesco also said it Board of Directors, the management team reported. In his first public appearance as CEO reduced expenses by 3.2 billion reais in the and employees of Quálitas deeply appreciate of Itaú, Brazil’s largest lender, Maluhy said the quarter, a 9.3 percent reduction year-on-year. the invaluable guidance of Don Joaquín,” the bank’s results in Chile and Argentina are not The closure of 1,083 branches helped to drive statement said. Quálitas is the company with creating value for shareholders. In its Chilean the expense reductions, the bank said. “2021 the largest market share in auto insurance in unit, Itaú CorpBanca, the lender has posted will be another year of overcoming challeng- Mexico, with additional presence in El Salvador, provisions for bad loans since it acquired es, but it will be a year of recovery more than Costa Rica, the United States and Peru. a controlling stake in 2016. For example, in adversity,” Bradesco’s chief executive officer, June, CorpBanca registered a noncash loss Octavio de Lazari, said in a statement. He also of $929.7 million due to the impairment of said the bank is expecting growth in loans and assets, Reuters reported. Maluhy also said declines in provisions this year. Bradesco said CABEI Issues First that although Itaú was mostly interested in it expanded its loan portfolio by 687 billion Global Social Bond acquisitions, it is open to sale opportunities in reais in the quarter, a 10.3 percent rise year-on- The Central American Bank for Economic Latin America, noting that the bank is satisfied year. Overall, Brazil’s level of bank lending grew Integration, or CABEI, announced Feb. 4 that it with its performance in Paraguay and Uruguay, more than 15 percent for the 12-month period had issued a global social bond, the first such according to the report. Maluhy took over as through November, banking industry associa- bond ever issued in Central America. Dante Itaú’s CEO on Feb. 2 following the retirement of tion Febraban said in December, marking the Mossi, the bank’s executive president, said Candido Bracher, who had been in that position sharpest increase in the country’s bank lending “issuing social bonds in the international cap- for about three years. Bracher is set to return to since September 2013. Factors including the ital markets demonstrates the bank’s strong the bank’s board of directors next year. Maluhy higher demand in credit from companies as commitment towards the social development started his career at Itaú in 2002, Reuters well as central bank incentives to boost lending of the Central American region.” CABEI’s social reported. On Feb. 1, Itaú reported a 26 percent helped to drive bank lending in Brazil in 2020, bond received demand of approximately $1.2 decline in fourth quarter recurring net income Cynthia Cohen Freue, sector lead for financial billion, 2.4 times the amount issued. The five- as compared to the same quarter a year earlier, institutions ratings at S&P Global Ratings, year bonds carry a 1.14 percent coupon, CABEI Reuters reported. The bank’s profit was in line told the Financial Services Advisor in a Q&A said. The bonds are designed to help fight with analysts’ estimates. Itaú’s recurring net published Jan. 27. social disparity and aid development.

REMITTANCES NEWS FEATURED Q&A / Continued from page 1

sent from the United States to Mexico are ter all, if the reform were to pass, we would Mexico Receives electronic transfers. Financial institutions expect Banxico to significantly strengthen $40.6 Billion in that participate in this market are not able secondary rules and norms to protect its to sell back to the market all the cash that is operational autonomy and the soundness of Remittances for 2020 purchased, forcing them to set up contracts the reserves. However, the negative signal to with correspondent banks abroad to buy the the markets would be much bigger. It would Mexico received $40.6 billion in remittances excess cash dollars. These correspondent mean the crossing of a line whereupon a re- last year, a record level and up 11 percent institutions face heavy regulations and form highly criticized on technical grounds— as compared to 2019, the Bank of Mexico supervision in turn from the U.S. federal and one that does not solve a problem but announced Feb. 2, Dow Jones reported. The banking agencies in order to ensure that the rather appears tailor-made for a specific increase defied expectations early last year cash comes from legal known sources. If interest group—passes in Congress despite that the money transfers would slide in 2020 a Mexican institution does not comply with the warnings that it infringes on the central due to the Covid-19 pandemic. Remittances the standard procedures, it is very likely to bank’s autonomy. After such a breach, more remained strong in December, rising 17 percent lose its contract and face reputational risk. concerning scenarios (including further as compared to the same month a year earlier, These measures have been largely success- encroaching on Banxico’s autonomy or on ful in limiting money laundering operations electoral rules, for example) would be re- through the dollar cash market. One financial priced as having positive probability. That is The sharp contraction institution lost its contract and no longer why this reform is a canary in the coal mine: of activity and has a means of disposing of its excess more important for the message it sends employment in the cash dollars. This institution has pressured than for its technical aspects. The Ministry U.S. have not impact- legislators to force Mexico’s central bank to of Finance can solve the concerns of its ed in a visible way the purchase the excess cash in the market. If proponents in many ways. Market-based flow of remittances this legislation is approved, the central bank alternatives that increase access are better to Mexico.” would be forced to purchase cash dollars, than government-based ones. The Mexican thereby exposing it to money laundering.” peso can again underperform if the reform is — Alberto Ramos approved, but the damage from this reform Ernesto Revilla, managing di- would not be in the form of an immediate the central bank said. “The sharp contraction rector and head of Latin Ameri- market reaction (after all, markets are trad- of activity and employment in the U.S. have not ca economics at Citigroup: “The ing more on global rather than idiosyncratic impacted in a visible way the flow of remittanc- A proposed bill is problematic factors), but in the increase in risk premium es to Mexico. Generous wage/income support for technical and institutional reasons. On that will be priced in more and more for fiscal transfers in the U.S., a very competitive the first one, Banxico and experts have Mexico.” MXN/USD level and a deep contraction of commented on why the reform is ill-advised activity and employment in Mexico may have to solve an exaggerated problem and will ex- Pamela Starr, senior advisor acted as both push and pull drivers of dollar pose Mexico to unintended consequences. at Monarch Global Strategies remittances from the U.S. to Mexico,” Alberto The reform argues that anti-money launder- and associate professor at Ramos, managing director and head of Latin ing (AML) rules that place limits on banks A the University of Southern America economic research at Goldman Sachs, accepting paper currency disproportionally California: “The Bank of Mexico Law, as said in a note. “Solid workers’ remittance flows penalize migrants and other workers. How- introduced to Congress last November, have been adding support to the current ac- ever, Banxico demonstrated that 99 percent would have huge negative repercussions count and to private consumption, particularly of remittances arrive in electronic form, and for Mexico. By threatening the autonomy for low-income families, who have a high pro- that the identified problem is not a systemic of the central bank, it would likely lead to a pensity to consume and are the overwhelming one. Furthermore, by forcing Banxico to reduction in Mexico’s sovereign credit rating recipients of such transfers.” The record level buy excess U.S. dollars, it could expose it and a weaker peso. This helps explain why of remittances and a trade balance surplus to AML sanctions and place international even AMLO’s nominees to the bank’s board “have more than offset the loss of income from reserves at risk. Although these technical have opposed the legislation. The bill would international travel/tourism,” Ramos added. aspects are concerning, the institutional oblige the Bank of Mexico to buy surplus Mexico’s current account surplus for 2020 is implications of the bill are even more so. Af- dollars that commercial banks are unable to likely to be more than 2.5 percent of gross Continued on page 6

COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 3 FINANCIAL SERVICES ADVISOR January 28-February 10, 2021 domestic product, he said. “Extraordinary fiscal support in the United States to individuals ADVISOR Q&A because of the pandemic” has helped to boost personal incomes and remittances to Mexico, Ernesto Revilla, managing director and head of Who Is in the Best Position to Win Latin America economics at Citigroup, told the Financial Services Advisor in a Q&A published Ecuador’s Presidential Runoff? Dec. 16. Additionally, a fall in spending relative to wages has led to higher levels of saving in Ecuador’s presidential race will the election was only about whether Correa the United States, and a lack of ability to travel go to a runoff on April 11 with would return to power, and supposedly due to the pandemic likely led immigrants to left-wing economist Andrés Lasso was the candidate who could win send more money to Mexico electronically Q Arauz, a protégé of former that match. But the results show a different rather than bringing it in person, leading it to be President Rafael Correa, in the lead. In story. Many undecided voters were tired accounted for in statistics, Revilla added. the Feb. 7 first round, Arauz garnered 32 of this discourse and were looking for an percent of the vote. It is still unclear who alternative. Pérez and Hervas (who obtained Arauz will face in the second round, as 16 percent of the vote) represent that. Also, POLITICAL NEWS conservative banker Guillermo Lasso and many dismissed the Indigenous and social Indigenous leader Yaku Pérez were tied with revolts of October 2019 as an attempt by about 20 percent each. What are the most Correa’s supporters to destabilize Moreno’s Colombia to Grant important factors driving support for the government, instead of understanding it as Legal Status to Many candidates, and who is best positioned to a call for a broader agenda that includes hu- win the runoff? What accounts for the surge man rights, feminism, inequality, racism and Venezuelan Migrants in support for Pérez, who had been trailing sustainability. If Lasso goes to the runoff, he Lasso in the polls? What is the chance of will have to substantially change his agenda Colombian President Iván Duque announced civil unrest given the closeness of the race to attract Pérez and Hervas voters as he is Feb. 8 that his government would grant legal between Lasso and Pérez? What will the a right-wing conservative who has made no status to nearly a million Venezuelan migrants results in Sunday’s congressional elections effort to step out of his comfort zone. Being who have been living in the neighboring in Ecuador mean for the country’s direction the alternative to Correa will not be enough. country, The Wall Street Journal reported. The and the next president’s agenda? Pérez, however, is more likely to attract migrants would be given temporary protected Lasso’s voters. Given the closeness of the Daniela Chacón Arias, executive results, it is very likely that there will be civil director at Fundación TANDEM unrest, especially if Pérez is not declared As we take this and former Quito vice mayor the second-place winner. His supporters are historic and transcen- A and city council member: “Many already mobilized.” dental step for Latin were predicting that Arauz and Lasso would America we hope go to the runoff and dismissed Pérez as other countries will a candidate who would obtain more votes EDITOR’S NOTE: More commentary on follow our example.” than an Indigenous leader has ever received this topic appears in the Feb. 8 issue of the but not enough to make it to the runoff. — Iván Duque Latin America Advisor. This analysis was based on the belief that status, allowing them to live and work in Co- Francis for countries to help migrants who are gration. The number of Venezuelans who have lombia for 10 years, the newspaper reported. fleeing war and deprivation, The Wall Street left their country could surpass six million by Duque made the announcement after meeting Journal reported. “We have to take actions— the end of this year, the agency has said. That with Filippo Grandi, the United Nations High not actions based on fear or rejection, but with would exceed the number of Syrians who fled Commissioner for Refugees. “As we take this fraternity,” Duque added. More than 1.7 million the civil war in their country. Colombia’s autho- historic and transcendental step for Latin Venezuelans have gone to Colombia, and hun- rization of Venezuelan migrants goes further America we hope other countries will follow dreds of thousands are in the country illegally. than that of any other country, said Grandi. “I our example,” Duque told ambassadors and More than five million Venezuelan refugees are can’t think of any event so historical, so without diplomats at the announcement, the Associat- spread throughout Latin America, according precedent and so important during my time, ed Press reported. Duque cited calls by Pope to the U.N. International Organization for Mi- as this announcement of temporary protection

NEWS BRIEFS for Venezuelans,” said Grandi, The Wall Street ond round” and “Lasso president.” In order to Journal reported. Most of the Venezuelans in win the election in the first round, a presidential López Obrador Resumes Colombia have fled their home country, which candidate would have needed 50 percent of the is beset by hyperinflation, food shortages and vote, or 40 percent with 10 percentage points Daily News Conferences political crisis, the Associated Press reported. more than the second-place finisher. Also on After Covid-19 Recovery Registering undocumented Venezuelans would Feb. 7, all 137 seats of Ecuador’s National Mexican President Andrés Manuel López help Colombia’s security agencies and make Assembly were up for election. The legislature Obrador resumed his daily morning news it easier to provide social services, including is likely to be fractured among several parties, conferences on Feb. 8 following a two-week vaccination against Covid-19, Duque said, the Bloomberg News reported. That could make absence after contracting and later testing AP reported. it more difficult for the new government to negative for Covid-19, the Associated Press advance its agenda. [Editor’s note: See the reported. He refused to wear a mask during Ecuador Presidential Advisor’s video interview on Ecuador’s election the conference or to require Mexicans to use with former Ecuadorean Ambassador to the them. “There is no authoritarianism in Mexico,” Election Heads to United States Nathalie Cely.] he said. “Everything is voluntary, liberty is the most important thing.” Public health experts Runoff, Arauz Leads have recommended the wearing of masks as ECONOMIC NEWS a key method in preventing the spread of the Leftist economist Andrés Arauz, a protégé of novel coronavirus. former President Rafael Correa, emerged as the top vote-getter in the first round of Ecua- Cuba Lifts Most dor’s presidential election on Feb. 7, though he Restrictions on Cuba Warns Colombia did not get enough votes to avoid a runoff, Re- uters reported. The second round is scheduled Private Businesses of Potential ELN Plot for April 11, though it is not yet clear who Arauz Targeting Bogotá will face in the runoff as Indigenous leader The Cuban government has lifted most of its Cuba has warned Colombia that rebels from Yaku Pérez and conservative banker Guillermo restrictions on private businesses in a bid to the National Liberation Army, or ELN, may Lasso were virtually tied for second place. With expand the private sector as the island nation be plotting an attack in Bogotá, Colombian 99.25 percent of the vote counted, Arauz led struggles to deal with its worst economic crisis Defense Minister Diego Molano said on Feb. 8, with 32.06 percent of the vote, while Pérez had since the fall of the Soviet Union, the Financial Reuters reported. Molano said Cuban Ambas- 20.09 percent and Lasso had 19.50 percent, Times reported Feb. 7. Labor Minister Marta sador José Luis Ponce had sent a “communi- the National Electoral Council said on its Elena Feito Cabrera announced that the govern- cation about a supposed terrorist attack being website the morning of Feb. 9. The closeness ment would allow private participation in more planned” for the following days. Molano said of the race between Pérez and Lasso came than 2,000 professions, instead of just 127 pre- Colombia’s armed forces and police had been as a surprise as polls before the election had viously. Only 124 areas will be reserved, totally deployed in response. shown Arauz and Lasso with double-digit leads or partially, for the state. She did not outline over Pérez, and with several other candidates which, the Miami Herald reported. The Caribbe- polling in the single digits. On election night, an nation is undergoing its sharpest economic Pérez told reporters that he had won enough contraction since the Soviet Union collapsed Haitian Court Justice votes to compete in the runoff, adding that he in the 1990s, as the Covid-19 pandemic has Among 20 Detained in would hold a vigil outside the headquarters of basically wiped out tourism revenues and Alleged Coup Attempt the electoral council in order to prevent votes sanctions imposed by the administration of from being manipulated, Reuters reported. former U.S. President Donald Trump curtailed Haitian authorities on Feb. 7 detained 23 “We’ve come with a plan to hold a vigil, in an U.S. travel and remittances. According to gov- people, including a Supreme Court judge, in active and respectful manner, but to defend the ernment figures, Cuba’s economy declined 11 connection with what they said was an alleged will of the vast majority of Ecuadoreans who percent last year, the Miami Herald reported. coup to oust President Jovenel Moïse, Reuters see hope for a change,” said Pérez. Lasso also The private-sector expansion comes weeks reported. The arrests came as the opposition asserted that he had advanced to the second after the government of President Miguel Díaz- demanded Moïse step down as his five-year round. “When we see 100 percent of the poll Canel devalued the peso and rolled back a dual term comes to an end. Moïse, who has been statements reviewed, it will be reconfirmed that currency system that had been in place in the ruling by decree for a year, has refused to va- we are in the second round,” he said at a rally in country for decades. [Editor’s note: See Q&A on cate the office until next February, saying that Guayaquil, where his supporters chanted, “Sec- Cuba’s currency reforms in the Nov. 2 Advisor.] is when his presidential term actually ends.

FEATURED Q&A / Continued from page 3 FINANCIAL SERVICES ADVISOR is published biweekly by the Inter-American Dialogue, Copyright © 2021 repatriate to the United States. Legislation the interference with the anti-inflationary requiring the bank to make these purchases monetary mandate, because extra reserves Erik Brand would not only weaken the bank’s constitu- imply more primary money in the economy, Publisher [email protected] tionally protected autonomy. By forcing it to which will consequently result in inflation if buy dollars without question, the new law the central bank is not able to fully sterilize Gene Kuleta Editor would also allow illicit operators to launder the extra amount of pesos. The option of [email protected] money through the central bank. If this were having Banco del Bienestar as the institution Anastasia Chacón González to happen, it would undermine the bank’s allowed to capture those extra dollars makes Reporter & Associate Editor capacity to undertake the foreign operations the problem worse, because that will imply [email protected] essential to its monetary mission. The legis- having a public bank with ‘open doors’ for lation is supposed to help migrant workers that extra cash of potentially doubtful origin.

change their dollars to pesos, but this makes If the bill is approved and implemented, then Michael Shifter, President little sense. Fewer than 1 percent of Mexican a side effect will be a faster accumulation of Rebecca Bill Chavez, Nonresident Senior Fellow remittance senders face this difficulty, and reserves, with a significant cost for the cen- Sergio Bitar, Nonresident Senior Fellow the bank, together with the Finance Ministry tral bank. Another effect will be the increase Joan Caivano, Senior Advisor and the Association of Mexican Banks, pro- in uncertainty and risk derived from a bill Michael Camilleri, Director, Rule of Law Program posed an alternative mechanism to deal with that undermines monetary independence, Kevin Casas-Zamora, Nonresident Senior Fellow this problem. Rather, the legislation seems thus affecting the value of the peso.” Héctor Castro Vizcarra, Nonresident Senior Fellow to be either a favor to AMLO’s main ally in Julia Dias Leite, Nonresident Senior Fellow the banking sector, Ricardo Salinas Pliego Alejandro Landa, partner at Ariel Fiszbein, Director, Education Program and his Banco Azteca, which is unable to Holland & Knight: “If enacted, Peter Hakim, President Emeritus repatriate dollars easily, or as an attempt to the proposed legislation would Nora Lustig, Nonresident Senior Fellow clip the wings of the Bank of Mexico. Both oblige the central bank to be Margaret Myers, Director, Asia and A Latin America Program possible explanations are disconcerting.” the buyer of last resort for cash dollars that Manuel Orozco, Senior Fellow Mexican banks cannot exchange. This is a Xiaoyu Pu, Nonresident Senior Fellow Alfredo Coutiño, director for risky endeavor. If the central bank buys the Jeffrey Puryear, Senior Fellow Latin America at Moody’s Ana- dollars that the Mexican institutions cannot Mateo Samper, Nonresident Senior Fellow lytics: “The proposed legislation change, they would be added to international Tamar Solnik, Director, Finance & Administration to modify the central bank law reserves. Because part of the cash could be A Lisa Viscidi, Director, Energy Program is not necessary, and it pretends to resolve connected to illicit operations, there is a risk Denisse Yanovich, Director of Development, an issue that does not exist for most of the of ‘infecting’ the reserves that function as External Relations & Special Projects banking institutions but rather for a single backing for the Mexican peso. This negative bank. Beyond the controversial argument be- perception could certainly affect the value of Financial Services Advisor is published biweekly, with the exception of major holidays, hind the proposal, to help few recipients of the Mexican peso. In addition, the autonomy by the Inter-American Dialogue at remittances to change their dollars into pe- of the central bank would be violated since 1155 15th Street NW, Suite 800 Washington, DC 20005 sos, the problem lies in a proposal that was the constitution grants it full control of www.thedialogue.org not subject to debate and consensus, par- reserve assets.” ISSN 2163-7962 ticularly because the bill affects the central Subscription inquiries are welcomed at bank’s functioning. First, the proposal does Editor’s note: The commentaries above were [email protected] not serve the nation’s utility and the society’s submitted before the Feb. 8 announcements well-being. Second, it would transfer sig- that Mexico’s central bank would offer credit The opinions expressed by the members of the Board of nificant risk to the central bank in terms of to commercial banks that have difficulty Advisors and by guest commentators do not necessarily represent those of the publisher. The analysis is the sole accepting resources from illegal activities. placing U.S. dollars and that Mexicans in the view of each commentator and does not necessarily Third, the law would undermine the central United States would be able to open accounts represent the views of their respective employers or firms. The information in this report has been obtained from bank’s autonomy because it would be forced through Banco del Bienestar. Also, the Advi- reliable sources, but neither its accuracy and completeness, to accumulate foreign reserves beyond the sor requested a commentary for this issue nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, limits permitted by the function of monetary from Mexico’s ambassador to the United contact the editorial offices of the Inter-American Dialogue. regulation. The fourth issue has to do with States but received no response. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permis- sion from the publisher.