manuel sanchez : the shared task of financial inclusion remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the sixth financial education summit, organised by banamex, mexico city, 19 november 2013. * * * it is an honor to participate in this meeting on financial education and economic citizenship. i am pleased that banamex has organized, once again, a forum for discussion and analysis that contributes to understanding the challenges posed by financial inclusion in our country, and to pondering viable options for promoting it. theory and international evidence show that financial intermediation and inclusion favor economic development and enhance living standards. among other benefits, access to banking services allows individuals and firms to make better savings decisions, carry out economic transactions efficiently, and finance consumption and investment. despite these advantages, mexico is under - banked relative to advanced countries, and also even relative to nations of similar or less development. the percentage of people with a bank account, the proportion of individuals and firms with credit, and the availability of distribution channels such as bank branches, automatic teller machines, and point - of - sale terminals for every 100, 000 inhabitants reveal that mexico is significantly behind, although the data also suggest a huge opportunity for improvement. 1 as is well known, many savers and seekers of credit meet their needs with ingenious methods running from investments in and trading of animals to rotating savings and credit associations ( tandas ). indeed, those with null or limited access to financial services have come up with other ways of saving, demanding loans, making financial decisions, and carrying out fairly complex operations in their own ways. in fact, the proportion of the population that uses informal financial services surpasses that using the formal system. 2 frequently, these schemes are effective. for example, contrary to commonly held prejudices, informal credit markets for people with low incomes tend to have a strong payment culture, partly because transactions occur in communities with strong binding ties. however, it is also true that informal vehicles hardly guarantee optimum scales and protect users from possible fraud, given that they lack adequate rules and supervision. low financial inclusion can obstruct or make more expensive the access to information and services indispensable to increasing people ’ s opportunities and improving social wellbeing. to the extent that this limitation may affect broad segments of the population, generally those with the lowest incomes, it can diminish the productive potential of social groups and entire regions, making marginalization more acute. obstacles to

energy and telecommunications. 5 the financial impact on mexico the adverse international environment has also had financial repercussions on mexico through two main channels. the first is a slowing in portfolio investment inflows, which nevertheless have tended to remain positive in contrast to those of many other emerging economies, where they have been significantly negative. as a result, nonresident holdings of peso - denominated government securities, a favorite for fixed - income investors for several years, continued to increase, and since 2015 have remained roughly constant in nominal terms. hence, the share of these holdings in the total outstanding has recently declined only moderately. however, this proportion is still one of the highest among emerging - market local - currency - denominated government securities. high and stable exposure to foreign holdings is a sign of strength. the confidence shown by investors in mexico possibly reflects the depth of the bond and peso markets and the credibility of the economic policy framework. the resilience of foreign portfolio investment has contributed to the relative stability shown by medium - and long - term market interest rates for government bonds. maintaining the preference of nonresident investors is obviously of paramount importance and can never be taken for granted. the second route for external impact has been in the public finances, originating, again, in lower oil prices. as with other large oil producers, pemex, the state - owned oil extracting enterprise, has seen its financial conditions deteriorate significantly. this, along with more than a decade - long decline in oil production, has resulted in a considerable increase in credit - risk perception. the rise for pemex credit default swap ( cds ) spreads has been more acute than for many other major oil - producing firms. more importantly, lower oil prices have dented the prospects for healthy mexican public finances. the fragility is due, first, to the fact that because pemex is state - owned, markets assume the government will back its debt under the pressure of contingencies. second, public - sector budgeted revenues depend heavily on oil income, which accounts for slightly less than one - third of the total, among the highest ratios in the emerging - market universe. 6 analysts ’ forecasts for u. s. industrial production and mexico ’ s gdp are, respectively, 0. 3 and 2. 4 percent for 2016, and 2. 3 and 2. 8 percent for 2017 ; see blue chip indicators 2016, april. for a discussion of mexico ’ s