UPDATE 1-Mexican president says cash bill must respect central bank's autonomy

  • 1/20/2021
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(Adds quote, context) MEXICO CITY, Jan 20 (Reuters) - Mexican President Andres Manuel Lopez Obrador on Wednesday said lawmakers should ensure a bill aimed at helping repatriate unwanted dollars does not affect the central bank’s autonomy, sharpening his message on the contentious legislation. The bill, pitched by the president’s National Regeneration Movement (MORENA), proposed making the Bank of Mexico (Banxico) buy up foreign cash that banks cannot offload. Supporters of the legislation, which passed the Senate last month, argued it would help migrants and hospitality workers exchange dollars which banks may be reluctant to take. Banxico said the changes could force the bank to absorb into its reserves money of illicit origin, such as cash laundered by drug cartels. That, it said, would undermine the financial system and could cause problems with authorities abroad. Speaking at a news conference, Lopez Obrador said a way should be found to ensure the bill helps people to convert their dollars into pesos without damaging Banxico’s independence. The legislation also needs to safeguard financial stability, as well as ensure that Mexico does not enter into conflict with international financial authorities, the president said. “That must be avoided,” he said, noting that it was important to take the central bank’s opinion into account. Lopez Obrador, who had at one point downplayed concerns about the bill, saying that talk of Banxico’s autonomy being undermined was an “exaggeration,” helped to persuade lawmakers last month of the need to rework the bill, officials say. The lower house of Congress is due to take up the legislation again in February. One possible solution under review is for it to be optional, rather than obligatory, for the central bank to buy up excess dollars, a congressional source said. (Reporting by Dave Graham Editing by Paul Simao)

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