interest rates for a wide array of maturities in a number of european countries. if they prevail too long, we do not know what impact these rates may have on financial stability or economic efficiency. that territory has never been explored, and its possible consequences can hardly be estimated. in such an uncertain scenario, an effective way for emerging economies to shield themselves against external shocks is by strengthening their macroeconomic fundamentals. at the same time, authorities must remain vigilant to detect factors that may endanger financial stability and react in a timely manner. financial developments in mexico like other emerging economies, during the last few years, mexico has been the destination of considerable portfolio capital flows. substantial external resources have been channeled to the domestic markets, and financing in foreign currencies has been successfully tapped by the government and corporates. mexico ’ s capital account openness has facilitated these inflows. the most noticeable impact has been observed in nonresidents ’ holdings of peso - denominated government bonds, which rose since 2010 to reach approximately 37 percent of the total outstanding. 7 it is worth noting that mexico ’ s banks are not large recipients of capital flows. they enjoy an ample, low - cost domestic funding base in pesos. also, prudential bank regulation, established in the 1980s and 1990s as a result of macroeconomic crises, imposes stringent foreign currency restrictions in terms of limitations for opening deposit accounts, caps on net liabilities and open positions, as well as a minimum liquidity ratio. obviously, mexico has not been immune to changes in global risk aversion. the clearest recent impact has been felt in asset prices, especially through movements in the exchange rate. in particular, the currency ’ s weakening and volatile trend since the middle of last year outstanding refers to federal government debt securities. bis central bankers ’ speeches has mostly mirrored the generalized appreciation of the u. s. dollar, in addition to the fall in oil prices. in contrast, medium - and long - term interest rates have increased moderately since the taper tantrum, resulting in steepening of the yield curve, slightly more than that of the united states. furthermore, since 2013, nonresident holdings of peso - denominated government securities have remained roughly stable as a proportion of the total outstanding. throughout these months, composition has changed, with long - term bonds gaining a higher share at the expense of zero coupon short - term securities, which may reflect a

and controls to combat money laundering, covering essential areas such as procedures for account opening, customer identification and record keeping as well as proper systems for reporting suspicious transactions and training of staff. please be in no doubt as to how seriously we regard adherence to these guidelines. the reason for this is simple. to paraphrase the health warning on a packet of cigarettes, “ money laundering can seriously damage your health ”. being associated with money laundering can seriously undermine confidence in an individual financial institution and potentially in a financial system as a whole. we are presently seeing this demonstrated in the case of the mexican banking system, which is embroiled in a money - laundering scandal. so what steps can a banking supervisor take to ensure that institutions are doing everything they can to protect themselves from being used for money laundering? the first thing is to make sure that the guidelines issued to institutions are kept up - to - date as techniques and patterns of money laundering evolve, and to ensure that institutions revise their own internal guidelines accordingly. we have recently revised our guidelines and issued them as a convenient booklet. i am pleased to say that demand for this has been high and we have issued over 5000 copies of the booklet. however, guidelines need to be put into practice. to ensure that senior management are focused on the need for this, money - laundering controls are a regular agenda item for our prudential meetings with management. they are also a regular topic for our on - site examinations. during these examinations we review an institution ’ s policies and procedures, look at their records of suspicious transactions, and interview staff at random to check that they have been trained to identify suspicious transactions and to follow the appropriate procedures for account opening and customer identification. we may also commission external auditors ’ reports if we think it necessary. so how do institutions in hong kong rate on combating money laundering? perhaps the best indicator of their vigilance against money laundering is the number of reports of suspicious transactions made to the joint financial intelligence unit ( jfiu ). these numbers suggest that institutions are certainly improving, as both the number of reports, and the number of institutions making reports, has been increasing over time. the number of reports made to the jfiu rose from only 264 in 1992 to 4210 in 1997. our own on - site examinations also suggest that the level of awareness, and the training of staff, is improving. so, overall, institutions are doing well. however, there is always room for improvement, and i