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Mexico’s top financial authorities issued an alternative banking program to help Mexican migrant workers in the United States make the most out of their remittances, which in 2020 amounted to over $40 billion.

The alternative banking plan comes as a response to the Bank of Mexico bill proposed by the country’s majority party, the National Regeneration Movement (Morena) in the Senate that would make it obligatory for the Central Bank of Mexico (Banxico) to purchase all surplus U.S. dollars from commercial banks.

The gut wrench reaction from Banxico officials, as well as from most commercial banks, was that the proposed bill was attempting to undermine Banxico’s autonomy. Consequently, voting on the bill was postponed until after Feb. 15.

Banking authorities, spearheaded by Treasury Secretary Arturo Herrera, Banxico Governor Alejandro Díaz de León, the head of the new, government-run Bienestar (Wellness) Bank Diana Álverez and the president of the Mexican Banks Association, Luis Niño de Rivera, issued a plan earlier this week intended to reinforce and amplify the means to make remittance management easier and more profitable, both for senders and receivers.

The plan includes the possibility for the Bienestar Bank to expand its activities through Mexican consulates in the United States and the possibility for the consulates to open up Bienestar accounts using the identity documents issued by the consulates, particularly to undocumented persons.

On this issue, the head of the Mexicans Abroad Institute, operated by the Foreign Relations Secretariat, explained existing consulate personnel could be trained to inform migrants as to how to open accounts.

Treasury Secretary Herrera announced this measure could make up for the lack of banking services in many places in Mexico where receivers have to change their U.S. currency through different sources – money exchanges – that profit from their monopolistic advantage.

Banxico’s Díaz de León said his staff is working on potential solutions in response to the Bank of Mexico bill’s attempt to have Banxico purchase all surplus dollars, a move all concerned see as potentially opening the doors to money laundering, with Banxico making illegal dollars legal. On this, Banxico is offering support for banks to justify the legality of their dollar surpluses.

Banks Association President Niño de Rivera said his organization was proposing the establishment, in tandem with the U.S. government, a proposal to jointly offer physical services to migrants such as ATMs, small bank branches and points of sale, both in the United States and in Mexico, in regions already indentified as having no reliable banking and exchange services.

Bienestar Bank Director Álvarez said that the state-owned and operated institution, created under the aegis of President Andrés Manuel López Obrador (AMLO), has already expanded to 433 branches within the national territory, as well as 2,000 more points of services that are the product of its working in tandem with small savings and loan associations, plus through all still-in-existence telegraph agencies.

Herrera said that 99 percent of all remittances are made via etrade, while only $280 million enter the country in cash, mostly at the U.S. border. He said that it is this cash that prompted the Bank of Mexico bill at the Senate.

As of late Wednesday, Feb. 10, there had been no reaction to this multilateral proposition from Bank of Mexico bill promoter and Senate Majority Leader Ricardo Monreal.

…Feb. 11, 2021

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