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The IMF labeled Mexico's financial system as "resilient," following government efforts to strengthen the regulatory framework, and said it was well placed to meet Basel III requirements, according to a statement from the multilateral following its 2011 Article IV consultations rounds.
The fund noted that the banking system continues to be liquid and well capitalized, and is mainly funded from domestic deposits. The IMF added that private sector credit growth has picked up, in line with the overall economic recovery, with household and corporate leverage ratios broadly stable.
"Directors welcomed the resilience of Mexico's financial sector - the result of the authorities' efforts to strengthen the regulatory and supervisory framework," the statement reads.
The multilateral said financial sector supervision "has been further bolstered by the establishment of the Financial Stability Council to monitor systemic risks and address potential vulnerabilities," adding that Mexico is well placed to meet Basel III prudential standards ahead of schedule.
Earlier this year, the IMF approved a flexible credit line arrangement worth 47.3bn special drawing rights (SDRs, some US$72bn in total) for the government to use if needed. The multilateral said this line has "backed the authorities' macroeconomic strategy by providing a significant buffer against potential tail risks."