Financial Sector Assessment Program (FSAP) in Mexico

Start & End Date: 1999-ongoing

Country/Countries: Mexico

Multilateral Institution(s) Involved: International Monetary Fund, World Bank

Case Study: Available

The FSAP was launched in 1999 in the wake of the Asian financial crisis to help countries to reduce the likelihood and severity of financial sector crises. Mexico is deemed by the Fund to have a systemically important financial sector and the stability assessment under the FSAP is part of bilateral surveillance under Article IV of the Fund’s Articles of Agreement.

The Financial Sector Assessment Program (FSAP) in Mexico is a joint program of the International Monetary Fund and the World Bank aiming at helping countries reduce the likelihood and severity of financial sector crises. Therefore, it focusses on countries that have systemically important financial sectors, based on a methodology that combines the size and international interconnectedness of each country’s financial sector. At the heart of the program Mexico is supported via a recurrent financial sector assessment (FSA) that provides a comprehensive framework for identifying financial system vulnerabilities and develop appropriate policy responses. The policy responses identified can get financial and non-financial support through MDBs and other development partners. Through these efforts, negative spillover effects of a financial instability in Mexico to the regional or global financial system can be avoided. It also provides Mexico with an opportunity to measure its compliance with financial sector standards and codes and, therefore, to benchmark their regulatory and supervisory systems against internationally accepted practices.

The FSAP identified several sector reforms that were implemented. Thus, it supported a stable international financial market architecture by reducing the likelihood and severity of financial sector crises in Mexico.