southern methodist university mission foods texas - mexico center 1st annual event thursday april 6th, 2017 “ us - mexico trade relationship in the age of nafta ” remarks by agustin carstens governor, banco de mexico 1. introduction i would like to start by thanking mission foods texas - mexico center at smu for having invited me as a keynote speaker at this first annual texas - mexico conference. it is a real honor and privilege for me. this event provides a timely opportunity to discuss the significance and benefits that efforts for regional integration have had for mexico and the united states. in my remarks tonight i will pay special attention to providing an overview of the benefits that nafta and trade in general have brought to the region. in particular, i will argue that nafta has allowed member countries to boost growth and to attain important productivity and efficiency gains that have led to welfare improvements for both producers and consumers across the whole region. furthermore, to the extent that we live in a very competitive global economy, nafta has meant that the north american region is better prepared to compete with the rest of the world. this is important, because recently nafta has fallen out of favor among notable sectors of the us population. nafta is twenty three years old, and as such, it safely can be said that it needs some fine - tuning. in particular, it is key to bring it up to date to incorporate progress and developments that have taken place in all the member countries since its signing. but such needed, and even desired, adjustments should not threaten the essence, nor the existence, of the agreement. i consider nafta – and i say this with full conviction – as one of the main milestones in the effort of bringing mexico and the us closer together, for our mutual benefit. it is worth recalling that mexico had sequential financial and fiscal crises in the 70s, 80s and the first years of the 90s, with severe consequences for the wellbeing of the population. therefore mexico realized that if it wanted to be considered as a trustworthy and reliable partner in the agreement, it needed to bring its house in order, and persevere in transforming the mexican economy into a resilient, dynamic one. to achieve this, mexico has enacted several reforms that seek to strengthen its macroeconomic framework and improve its microeconomic structure. these efforts should leave no doubt that mexico is fully committed to take all the necessary steps to make the economic integration within the region a lasting success. so before

will focus on two issues : on our financial sector and on the international level. in our financial sector we need to : 1. review capital sufficiency and buffers of all financial institutions. 2. include all financial intermediaries to be subject to a minimum of disclosure and risk management practices related to climate risks to avoid loop - holes that could generate serious distortions both to the climate and financial stability agendas. 3. bear in mind that old regulation instruments might be ill suited to address these new risks. 4. we welcome the renewed strong efforts by international organizations to advance and homologate the global climate agenda across countries and this agenda includes upgrade of risk management practices through scenario analysis, enhance disclosure, address data gaps and establish standards and metrics. and in terms of what international fora can do : 1. i think multilateral institutions can unlock attractive investment funding at low interest rates in exchange for credible greenhouse gas mitigation while at the same time providing capacity and technology resources to ldcs and emerging economies. the potential positive externalities 2 / 3 bis central bankers'speeches created by multilateral development banks ( mdbs ) catalytic role in this agenda are, i believe, of historic proportions. 2. this will also increase the resilience of global financial systems to climate risks. 3. we also need to develop innovative structures to diversify risk, through, for instance, pooling a large set of projects in many jurisdictions backed with guarantee schemes or other de - risking solutions. blended finance structures can unlock private sector financing of the transition to a low carbon economy. 4. finally, it is fundamental for emerging and ldcs more exposed to physical risk to also be able to increase the resiliency of their economies. in this respect, international financial institutions ( ifis ) and mdbs should develop preauthorized facilities, i. e., credit lines and buffers, as part of risk sharing mechanisms to enhance the resilience of individual regions or countries and the global financial system 3 / 3 bis central bankers'speeches