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Mexico Sets Ambitious Climate Finance Goals to Drive Green Economy
Mexico City, Mexico - The Mexican government has announced a bold plan to establish a climate finance strategy and introduce a green taxonomy to drive the country’s transition to a low-carbon economy.
Background
According to a report by the International Monetary Fund (IMF), Mexico is well-positioned to make significant strides in reducing its carbon footprint and promoting sustainable development. The report recommends that the government set ambitious climate finance targets for development financial institutions, deepen green markets, and enhance the oversight of the Interbank Electronic Payment System.
Recommendations
The IMF also suggests that Mexico should:
- Develop a macroprudential policy strategy
- Expand the liquidity stress test framework
- Improve cybersecurity regulatory practices
- Introduce statutory bail-in powers
- Eliminate barriers to the effective use of resolution tools
Economic Context
Mexico’s economy has been gradually recovering from the pandemic, with growth bouncing back to 4.8 percent in 2021. However, the country still faces significant challenges, including rising inflation and downside risks related to global financial conditions.
Opportunities for Transition
Despite these challenges, Mexico is poised for a structural transition to a digital and green economy. The use of digital financial services is increasing, offering opportunities for increased financial access and inclusion. Meanwhile, policies supporting the transition to a lower carbon economy could affect earnings in carbon-intensive industries and banks that lend to them.
Government Commitment
The Mexican government’s commitment to climate finance and green growth presents a significant opportunity for the country to not only mitigate the impacts of climate change but also to drive sustainable development and economic growth.
Key Recommendations
- Establish a climate finance strategy
- Introduce a green taxonomy
- Set ambitious climate finance targets for development financial institutions
- Deepen green markets
- Enhance oversight of Interbank Electronic Payment System
- Develop macroprudential policy strategy
- Expand liquidity stress test framework
- Improve cybersecurity regulatory practices
- Introduce statutory bail-in powers and eliminate barriers to effective use of resolution tools
Sources
- International Monetary Fund (IMF)
- Government of Mexico