Monday, July 7, 2010
Mexican President Calls for Solid Global Financial System
Presidency of the Republic
ˇ In Toronto, President Calderón says, "Global financial markets require clear new rules
that will eliminate uncertainty and provide a roadmap towards recovery."
(Speech transcript)
I thank you for the opportunity
to share some ideas on regulatory reform, a key issue in strengthening the global financial system.
At the G-20 Summit, held in London
last year, when the global financial system was going through a difficult period, we agreed to strengthen the framework for
the regulation and supervision of the financial system. A year later, proposals have been elaborated that will enable us to
achieve the most important reform of the financial system the world has seen, both because of its depth and its global scope.
Mexico hails the efforts made
by the Basle Banking Supervision Committee to create a package of regulatory reforms, and by the Financial Stability Board
to reconcile our positions in order to achieve significant agreements.
We therefore agree with Mario
Draghi, president of the Financial Stability Board, on the need to establish a stricter definition of capital and liquidity
standards, which consider the difficulties for gauging risks more accurately. We must reach an agreement in this issue as
soon as possible and ensure a sufficient transition period to prevent collateral effects on global recovery.
Mexico also supports the proposal
submitted for addressing problems associated with Systematically Important Financial Institutions (SIFIS), through the establishment
of a restricted discretionary frame which establishes regulatory principles and measures that can be adjusted by each country
according to its particular circumstances.
In this respect, in Mexico, we
consider that the most appropriate set of measures for addressing the problems posed by SIFIS are:
Establishing an institutional
framework for addressing the collapse of systemic institutions.
Establishing additional capital
charges for activities that generate systemic risks.
Issuing convertible bonds through
financial institutions.
Strengthening international coordination
among supervisors to obtain timely information and establish strategies for addressing the collapse of these institutions
that are present in several countries.
Expanding the scope of regulation
to include other organizations, instruments and markets that may create systemic risks.
Designing joint measures to identify
non-cooperating jurisdictions and reinforce information exchange.
In the meantime, Mexico has been
improving its financial stability with the help of FSB, which has worked to promote cooperation between our supervisors in
the financial sector, including the peer review we have established between our countries. Mexico was the first country to
be evaluated as part of this exercise, which proved extremely useful in evaluating the regulatory policy decisions we have
made.
We have advanced towards the
strengthening of the regulatory framework of our financial system:
We moved from a scheme of provisions
for financial institutions based on the concept of observed arrears to one of expected losses.
We have adjusted the definition
of capital, meaning that we now have very high quality requirements for capital demand.
We are working on the establishment
of a Financial Stability Committee which will enable authorities on the issue to detect systemic risks early and act on them.
We will send Congress a bill
contemplating a framework for addressing bankruptcy in banks, based on best international practices.
Within the framework of G-20,
we have advanced a great deal in a year and our teams have made an enormous effort, discussing how we can achieve our goals.
However, we cannot wait any longer, we must act now. Global financial markets require clear new rules that will eliminate
uncertainty and provide a roadmap towards recovery.
Let us redouble our efforts to
reach an agreement to regulate markets so that we can reduce the systemic risks for the global financial system and, at the
same time, promote world economic recovery.
In order to achieve our objectives,
all our countries need to make a great effort. That is why, with an enormous will and spirit of collaboration, I invite you
to continue working determinedly to jointly construct a solid, lasting and effective global financial system.
Thank you
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Press Release: Presidency of
the Republic, June 28, 2010, Toronto, Canada; translation Presidency of the Republic
