Banxico's Measures Do Not Print Money to Fund the Government

Summary

Banxico’s measures look to meet three main targets: an orderly function of local fixed income markets, facilitation of banking credit flows and the injection of more liquidity into the Mexican financial system under the current economic context.

Key points

• Key points:
• The extension of the Ordinary Additional Liquidity Facility to development banks and the reduction in the Monetary Regulation Deposit have created suspicion that Banxico may be printing money
• Nevertheless, Banxico will neutralize the monetary impact of such measures and, therefore, no money creation will occur
• Banxico's measures will help to mitigate the risk of the current economic crisis turning into a financial crisis
• We reiterate that such measures will be more forceful to the extent that the monetary policy rate decreases further and development banks participate decidedly through credit guarantees

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