The Mexican Central Bank issued a press release announcing that it will ban financial entities from using benchmark interest rates for terms greater than 1 banking day as of 2024.
On December 20, 2022, pursuant to various recommendations issued by the Financial Stability Board and the International Organization of Securities Commissions, the Mexican Central Bank issued a press release announcing that it will take certain actions and make changes to financial regulation to (i) forbid the use of the 91 and 182-day term TIIE for new agreements entered into as of January 1, 2024; (ii) forbid the use of the 28-day term TIIE for new agreements entered into as of January 1, 2025; (iii) financial institutions after the aforementioned date will only be allowed to use as a benchmark rate the funding TIIE (calculated at 1 banking day) or any other rate established by the Mexican Central Bank; and (iv) Mexican Central Bank will modify the methodology for calculating TIIE greater than 1 banking day so that current agreements that use such reference rates will not require to be adjusted via amending agreements.
As of the press release date, Mexican Central Bank recommended that financial institutions begin using the 1-day TIIE as a benchmark rate for variable rates.
Next steps
- Mexican Central Bank to issue draft amendments to various financial general dispositions for public consultation.
- Analyse the need to amend existing agreements in order to adjust reference rates.
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