On October 8, the Bank of Mexico (Banxico, in Spanish) opened two public consultations on reference interest rates. The first one establishes provisions regarding the use of reference and substitute rates agreed between financial institutions and the central bank. Comments on the consultation can be sent via the following link. The second allows financial institutions to use the Equilibrium Interbank Interest Rates (TIIE in Spanish) for Funding as reference rates. Comments can be sent to the following link. Both consultations have a deadline for comments on October 21.
The first consultation makes amendments to Circular 14/2007 on the use of interest rates in financial services. The draft mentions that when a reference rate (value of Banxico’s monetary lending rate) is agreed, one or more substitute reference rates will have to be agreed in case the original reference rate no longer exists or is not considered adequate for the institution in reference to market conditions.
On the other hand, the second public consultation proposes changes to Circular 03/2012, and states that those passive operations entered into by financial institutions that include variable interest rates may use the TIIE for Funding (interest rate calculated on the basis of an auction) as a reference rate. At the same time, the text under consultation eliminates the LIBOR (London InterBank Offered Rate), with the aim of “using new reference rates that comply with the best practices and standards at a global level”