Bank of Mexico Touts Financial System's Stability Despite Economy's Weakness

• Mexico's central bank expressed confidence in the country's financial system despite the "notable weakness" of Latin America's second-largest economy and risks from market volatility and potential trade conflicts.
• In its biannual financial stability report, the Bank of Mexico attributed the system's stability to strong institutions, highlighting its "solid and resilient" framework, with capital and liquidity levels exceeding regulatory requirements.
• "While the vulnerabilities and risks identified for financial stability are generally considered limited, unexpected or severe shocks could affect its proper functioning," Banxico, as the central bank is known, noted in the report.
• Mexican markets have experienced considerable volatility in the year's second half, amid elections in Mexico and the U.S., its top trading partner. U.S. President-elect Donald Trump has promised to levy a 25% across-the-board tariff on Mexican imports.
• Uncertainty over a slew of constitutional overhauls in Mexico also contributed to a weakened local currency. Still, Mexican markets have managed to behave in a "relatively orderly" manner, the report said.

(Source: Reuters)