In The Crisis in the U.S., Mexico glances at

Each time the United States is experiencing difficulties, eyes inevitably look to Mexico markets discounting its economy will feel surely impact.

That's why the aggravation, these days, the crisis in the U.S. financial system, is raising questions about how you can detach the Mexican economy to U.S. influence and how the Mexican financial system will remain immune from the aftershocks of the crisis the financial system of that country.

Given this situation of turmoil in international markets, the increase in the loan portfolio loans in the Mexican banking system (which was 16.5% in the second quarter), driven by the deterioration in consumer credit, has generated some fear about the health of this country's financial system.

Related to this, last week, Standard & Poor's warned that mortgage delinquencies could rise in Mexico because consumers resent the pressure on their pockets by the constant price increases.

To calm fears, Finance Minister Agustin Carstens said in relation to the possible impact of the crisis in the U.S. financial system on the Mexican banking system: "If this crisis had been five or six years, they would have affected Mexican banks, but now in a strong position?.

Specifically what we are living in the U.S., Agustín Carstens said: "What we're seeing with the U.S. banks is a problem of digestion. EU officials are acting quickly and well and if you're getting in a context of great uncertainty, but once it leaves behind, the road ahead is becoming clearer, although there is no assurance that the worst is over ?.

Is that beyond the fears that may exist, the fact is that today, the Mexican financial system is very solid and well protected from possible influences of the U.S. financial system. And in terms of the mortgage portfolio (considering the source-responsive element of the current crisis in the U.S.), it does not have the size that existed in the U.S., and low volume, shows that the same is high quality product selection demands made by banks.

Even if the international market turmoil intended to affect Mexico, the country has a good cushion of international reserves to cope. The international reserves of the country are close to U.S. $ 82,000 million.

For now, the Mexican banking system, rather than thinking in a certain impact of the crisis in the U.S., is located in the advancement of measures to improve efficiency.

Basically, in the Mexican banking system is considering two measures to be implemented in the short term: one is what is known as portability payroll (which is nothing but a worker's ability to choose where they want to receive payment). The other measure to be implemented soon is the determination to create the Treasury Single Account (decision taken by Ministry of Finance and Public Credit), which main objective is to give order to the management of government accounts by concentrating resources. With this arrangement, not only achieve a more transparent and auditable management of the funds are distributed among units but workers in the service of the State may choose where they want to receive your payment.

These two measures tend to increase competition in the banking system to attract customers, and probably some of them specializing in certain segments. In addition, interest rates will decrease by payroll loans will be extended deadlines and credit institutions will be highly creative to attract and retain customers.

While not seem to be by the financial system to transmit the turbulence of the U.S. economy on Mexican, yes probably the main effects will be felt on the same side of the external sector and lower remittances they receive from the U.S.. UU.

In relation to the incidence of problems in the U.S. economy, Carstens has expressed concern not because it understands that slowing growth in Mexico is reaching its limits and that the Latin American country's economy should grow 3.0% in the 2009.

The worsening U.S. financial crisis may lead to a positive impact on the Mexican economy because of the impact on international commodity prices (especially food), which are causing significant inflationary pressures in the economy.

Lower inflationary pressures can enable the Bank of Mexico to develop a less harsh monetary policy, which could benefit both the economy and the competitiveness of the Mexican exchange rate.

Overall we can say that the Mexican economy is strong to withstand the onslaught of the U.S. financial crisis, and even the aggravation of it, can generate positive effects in limiting the inflationary pressures that currently represent one of the biggest challenges Mexico.

We will meet again tomorrow,

Horacio Pozzo