CEMLA measurements based on microdata from the 2021 National Financial Inclusion Survey show that 11.1 million people and 4.9 million households in Mexico receive remittances from abroad. This implies that 12.3% of adults in the country and 13.6% of households receive remittances. A high percentage of remittances are received by small communities in the country.

We are very excited to announce the XXVII Meeting of the Central Bank Researchers Network Conference organized by CEMLA. The Conference Program involves Keynote speeches by Enrique G. Mendoza and Pablo A. Guerrón-Quintana. Conference presentations will be held in person in Mexico City and digitally.

Submission deadline: August 5, 2022.

Please find the call for papers here

During the first quarter of 2022, employment and the wage bill of Mexican immigrant workers in the United States continued to increase, which favored their remittances to Mexico. In said quarter, this wage bill totaled 78.264 billion dollars and remittances sent to Mexico from that country reached 11.937 billion dollars, so that the percentage of income obtained that was sent as remittances to family members was 15.3%.

The Mexican immigrant population is present throughout the United States, but a small number of states concentrate most of the immigrant population. Thus, California and Texas are home to nearly three out of every five Mexican immigrants. In 2021, these two states accounted for 52% of the employment of Mexican immigrant workers and generated 53% of the total wages earned by this immigrant group. That year, 49% of remittances received by Mexico came from California and Texas.

The note measures remittance inflows in Mexico in relation to the country's main macroeconomic indicators, such as GDP, private consumption, public and private investment and external accounts. It highlights how the dynamism of remittances in recent years and the weakness of domestic economic activity have led to an increase in the size of remittances relative to macroeconomic aggregates.

The Latin American Journal of Central Banking (LAJCB) has published the article "Measuring systemic risk for bank credit networks: A multilayer approach", written by Ricardo Montañez-Enríquez, from CEMLA's Financial Stability Directorate, in collaboration with Eduardo Yanquen (Banco de la República), Giacomo Livan (University College London) and Serafín Martínez-Jaramillo (Banco de México). The article applies a variant of the DebtRank algorithm to identify the vulnerability of the Colombian banking system through a multilayer approach in its credit portfolios, showing the heterogeneity of the risk profiles of its members and the presence of network effects capable of propagating shocks in the system. The report is available at the following link.

The Latin American Journal of Central Banking (LAJCB) has published a new study by Anahí Rodríguez-Martínez, from CEMLA’s Directorate of Financial Stability, in coauthorship with Fernando Borraz (Banco Central del Uruguay), Giacomo Livan (University College London) and Pablo Picardo (Banco Central del Ururguay). The paper is titled “Price, sales, and the business cycle: Microeconomic evidence”. This study uses a rich weekly price database to analyze the relationships among prices, sales, and business cycle conditions captured by the unemployment rate. Using a time-series PCA, the authors find that all product categories share a mutual correlation structure.

The Network for Greening the Financial System (NGFS) has published the final report of the joint Study Group on Biodiversity and Financial Stability. The report identifies environmental threats to the financial system and the role of central banks in mitigating financial risks arising from biodiversity losses. Ricardo Montañez-Enríquez, from CEMLA's Financial Stability Directorate, contributed to this report with an analysis on the exposure of the Mexican financial system to risks related to biodiversity losses. Among other results, the analysis highlights that 36% of bank credit in Mexico is related to industries highly dependent on ecosystem services. The report is available at the following link.

In 2020, the wage bill of Mexican immigrant workers in the United States declined due to the sharp drop in employment that occurred in the first months of the year. However, the recovery of employment and average wages of such workers throughout 2021 led their wage bill to reach US$283 billion that year. In 2021, the ratio of Mexico's income from remittances from the United States to the wage bill of Mexican immigrant workers in that country was 17.3%. In the first half of 2021, this ratio was 16.6% and rose to 17.9% in the second half of the year.

A research team from CEMLA’s Directorate of Financial Stability has published a new working paper in the Discussion Paper Series of the Halle Institute for Economic Research (IWH). The study is joint work with coauthors from Banco de México and explores the effect of financial development on the pass-through of financial stress to economic growth. The working paper can downloaded here.

During 2021, the increase in economic activity in the United States led to an increase of 433,900 jobs and 6.6% in the employment of Mexican immigrant workers. This improvement in employment was made up of 253,815 male workers and 180,085 female workers. The sectors of activity with the greatest increases in such employment were the construction industry with 180,000 jobs and food and lodging services with 138,000 jobs. It is worth to mention that in December 2021, Mexican immigrant workers in the United States represented 22.4% of the total number of workers in the construction industry.

In 2021, Mexico's remittance income has shown high growth financed mainly by a significant increase in the wage bill of Mexican immigrant workers in the United States. The higher wage bill has originated from a significant recovery in the employment of Mexican workers accompanied by increases in their average wages.

In an effort to enhance the understanding of the challenges posed by ecological degradation, Banco de México and CEMLA held an International Conference on Biodiversity and Environmental Challenges for the Financial System. The Conference, held digitally between November 30 to December 2, 2021, brought together scientists, policymakers, and representatives from private companies and NGOs to discuss the emerging challenges posed by biodiversity losses for the financial system. The agenda is available here, while a video record of the Conference’s sessions is available in Banco de México’s YouTube channel here.

CEMLA’s Directorate of Financial Stability co-organized jointly with the Bank of Canada, Banco de México, the Journal of Financial Stability, and the University of Zurich the IV Conference on Financial Stability. The Conference was held in digital format on November 23-25, 2021, and was attended by more than 120 representatives from universities, central banks, and CEMLA’s associated institutions. The Conference features sessions on topics related to network analyses, the intended and unintended consequences of regulation, and the effect of the COVID-19 crisis on the real sector, among others. The agenda, available here, included keynote sessions by Markus Brunnermeier, Director of the Bendheim Center for Finance, Princeton University and Jing Yang, Managing Director of the Bank of Canada’s Financial Stability Department.

Vacancy: Senior Research Economists and Research Assistants

Degree required: Doctorate/Master's degree
Job start date: Flexible
Job duration: The position offers a fixed-term contract that may be extended or made permanent depending on CEMLA’s organizational needs and the performance of the incumbent.
Interviews: Interviews will be conducted starting December 06, 2021, until job positions are filled.

The World Bank has highlighted recent work by Dr. Matias Ossandon Busch from the Directorate of Financial Stability on the effectiveness of macroprudential policies. The blog article summarizes the result of a research project on the transmission of reserve requirements within banks and across regions using granular data on the Brazilian banking system.

The pandemic that hit the world since the first months of 2020 also affected the remittances received by the countries of the Latin American and Caribbean region, showing strong decreases at the beginning of the second quarter of that year that, however, thanks to the elements that analyzed in the document, during the following months it was reversed and became a vigorous annual growth of 18.2% at the end of the year, which served as support to alleviate the effects of the pandemic among families in the countries receiving these resources.
The document also analyzes the behavior of the first half of 2021 and how the economic recovery of the remittance-sending countries is generating improvements in the sending of remittances, which allows forecasting even higher growth, between 17% and 22%, for the end of this year.

In 2020, Bolivia received 1,115.7 million in remittances from abroad, ranking 13th among the countries receiving remittances in Latin America and the Caribbean and reaching 2.4% of its GDP. These resources come from the efforts of Bolivian emigrants distributed in various countries of the world. For this reason, a survey was carried out, and this study was prepared, which covers aspects such as gender, age, education, sector of activity in which they work abroad, income levels, remittances, as well as financial inclusion indicators of Bolivian migrants abroad. This study represents a joint effort of the CEMLA Forum on Remittances for Latin America and the Caribbean and the Remittances and Financial Inclusion Program, carried out by the IDB-LAB, the Inter-American Development Bank group, and CEMLA.

The Journal of International Money and Finance (JIMF) has published a new study by Dr. Matias Ossandon Busch, from CEMLA’s Directorate of Financial Stability, in coauthorship with Dr. Helge C. N. Littke from the Deutsche Bundesbank. The paper is titled Banks fearing the drought? Liquidity hoarding as a response to idiosyncratic interbank funding dry-ups, and it provides evidence on the effect of bank-specific interbank funding shocks in Brazil on the credit supply of bank branches in Brazilian regions.

The European Money and Finance Forum (SUERF) has also published a policy note summarizing the paper’s main findings. The policy note is available online in the following link.

Remittances received by Mexico from abroad raise the living standards of recipient households and reduce poverty. However, the contribution of this income is practically ignored in the measurement of poverty. This is due to the fact that the ENIGH, which is CONEVAL's basic input for its poverty measurement, only captured 6.8% of remittances in 2020, which means that almost 38 billion dollars in remittances were not considered in the referred measurement. This problem is even more serious at the state level, particularly in those states that are the main recipients of remittances and stand out for their low per capita product. In 2020, the poverty measurement did not consider remittances equivalent to 14.6 points of state GDP in the case of Michoacán; 13.1 points of GDP in Guerrero and 11.1 points of state GDP in Oaxaca's poverty measurement.

The Latin American Journal of Central Banking, which has open access, has published a new research paper entitled "A sentiment-based risk indicator for the Mexican financial sector". This paper applies sentiment analysis to text data to construct novel indicators of financial stress in Mexico. They propose a new sentiment index using three different machine learning models to analyze the sentiment embedded on Twitter messages, and build alternative sentiment indices to enhance the analysis of stress in the financial system. They find that such novel index captures the impact of sources of financial stress not explicitly encompassed in quantitative risk measures, such as financial frauds, failures in payment systems, and money laundering.

The Latin American Journal of Central Banking, which has open access, has published a new policy paper entitled "Policy report on FinTech data gaps". This paper surveys the key challenges that fintech activities represent for a regulatory reporting framework. The authors identify the most relevant fintech data gaps frm a central banking perspective, including: monetary policy, financial stability, payment systems, and economic activity. They suggest possible steps that central banks could take to overcome data gaps and improve data collection based on their current experience.

By the middle of the current year, employment of Mexican immigrant workers in the United States had already recovered from the severe decline in early 2020 due to the COVID-19 pandemic. In fact, employment levels of such workers in May-June 2021, slightly exceeded those observed in the first months of 2020.

In 2019, Latin America and the Caribbean received a record amount of remittances from abroad, which reached 93.7 billion dollars, adding sustained growth in the last ten years. The annual growth rate was 8.3% and originated above all in the development of the labor market of migrants from the region in the United States, which favored more the Central American countries and Mexico, characterized by having a greater concentration of their migrants in this country. On the other hand, migrants from South America showed lower annual growth rates of the received remittances, because they have a large proportion of their migrants in neighboring countries, which presented lower economic growth and consequently made it difficult to send remittances for their migrants who reside in them.

This meeting was held in virtual format, on 25 - 27 May 2021. The meeting aimed at sharing regional and international experiences about data governance, advances in data governance, security challenges for the use of micro-data and COVID-related data challenges in Latin America and the Caribbean. The meeting was opened by Dr. Manuel Ramos-Francia, while the Keynote session dedicated to data governance in central banks was presented by Mrs. Silke Stapel-Weber from the European Central Bank (ECB). On the other hand, Mexico and Portugal showed their experiences in data governance focusing the growing demand of microdata as a way to increase central banks' analytic capabilities. While Brazil, Norway and ECB, discussed experiences in addressing key governance challenges related to the collection and management of micro-data at central banks. An analysis of central banks' information disclosure during the COVID-19 pandemic in Latin American and the Caribbean region was presented. Finally, representatives from the FIF members shared the most relevant statistical challenges faced by central banks in the pandemic.

The seminar was held in virtual format, from July 5 to 7, 2021. The main objective of the seminar was to constitute a forum of experts with the purpose of presenting some of the advances that have been achieved in this matter in central banks and promote the exchange of experiences and ideas among them. Surveys are a very important mean by which central banks generate economic information that contributes to a better monitoring of economic and financial activity, with timely indicators of its evolution and of early warning of possible risks arising; as well as indicators that allow authorities to assess the impact of their policy decisions on the economy and the financial system. In general, the presentations made by the central bank officials covered the methodological aspects of the design and application of the surveys, and commented on the analytical usefulness of the results obtained for the central bank authorities and for other users.

The Latin American Journal of Central Banking, which has open access, has published a new research paper entitled “Commercial and banking credit network in Uruguay”. This paper proposes the use of network analysis to measure the relevance in structural terms of economic sectors and build a commercial debt network in Uruguay. Besides identifying the most central economic activities, the authors compute the centrality metrics for banking institutions given the sector’s level of indebtedness. They find that the banks with highest degree centrality in the network overlap with those that have higher capital requirements for systemic risk.

The Latin American Journal of Central Banking, with open access, has published a new research paper entitled “The contribution of the intra-firm exposures network to systemic risk.” This paper proposes an innovative measure of systemic risk, which involves the interbank and intrafirm financial exposures in Uruguay. The authors argue that overlooking intrafirm exposures could lead to underestimate the systemic risk in the financial system. In fact, they found that, based on their model, the most important source of vulnerability among banks to financial contagion comes from the real sector of the economy, as opposed to the interbank exposures.

The Regional Conference on Payments and Market Infrastructure was held in collaboration with Banco de la República (Central Bank of Colombia), from June 15 to 18, as a digital event. The Conference was inaugurated by Dr. Manuel Ramos Francia, Director General of CEMLA and General Manager Leonardo Villar, from Banco de la República (Colombia) remarking that the Conference took place amid an unprecedented context of transformation for payments and financial market infrastructures. There were two keynote speakers, from Dr. James McAndrews and Professor Rodney Garratt, both former senior members from the Federal Reserve Bank of New York. The Conference served to discuss the most relevant research and policy work for payment systems and financial infrastructures, in light of financial technologies and other important innovations taking place recently. The agenda of the Conference comprised four topics, namely: Interchange Fees, Central Banks Digital Currencies, Financial Market Infrastructures and Payments, and Retail Payments issues.

From June 21 to 23, 2021, the “Meeting of experts on good governance and transparency: autonomy of central banks” was held by videoconference, sponsored by the Banco de España and CEMLA. In the meeting, the impact of some effects of the COVID-19 pandemic on the different frameworks of action of central banks, in particular, with regard to their independence, governance, functions and transparency was analyzed. It was stressed that the theme of the meeting is extremely timely at this time when central banks have had to take extraordinary actions in response to the economic crisis caused by the pandemic.

In June was held the Seminar on Remittances, Migration, and Gender, where the results of the study carried out by CEMLA, IDB-Lab, and Banorte on the case of Mexico were presented. The study focused on identifying the profile of Mexican woman immigrants in the United States and the remittances they send to Mexico. The Banorte database used in the study included records of 9,490,221 remittance transfers, 30.6% of which were made by women. The study highlighted that remittances sent by women are 20% lower in value than those sent by men and that women are the main beneficiaries of transfers (71%) regardless of the gender of the sender. In terms of financial inclusion, the records showed that only 18.7% of these transactions were made as an account deposit.   

With the collaboration of the Banco Central de Costa Rica and the participation of central banks, statistical institutes, remittance service providers, and international organizations, in June was held the “Seminar on the results of migration, remittance and financial inclusion surveys collected from Costa Ricans and Nicaraguans emigrants” who visited their country in the December 2019 period. The survey covered aspects of the profile of these immigrants, gender, age, education, sector of activity in which they work, income levels, sending and amount of remittances, indicators of financial inclusion, and others. The study represents an effort by CEMLA, as part of the activities developed by the Latin American and Caribbean Remittances Forum, and the Remittances and Financial Inclusion Program, carried out by CEMLA and IDB-LAB, of the Inter-American Bank group. developmental.

A research team from CEMLA (Dr. Carola Müller, M.S. Raúl Morales Reséndiz, and M.S. Anahí Rodriguez Martínez) together with M.S. José Aurazo have been awarded financial support under the FIT IN Initiative developed with the support of the Bill & Melinda Gates Foundation and supervised by Toulouse School of Economics (TSE). The team studies the effects of fintech payment aggregators into retail payments markets on financial inclusion, optimal interchange fees and welfare of consumers and merchants under conditions that prevail in many emerging economies. The project is entitled: An interchange model for fintech in payments in emerging economies: The case of sub-acquirers in payment cards.