implement international financial standards and agree to undergo periodic peer reviews using imf / world bank financial sector assessment program reports, among other actions. an important number of initiatives being discussed are aimed at preventing the financial system from leveraging itself to the extent that it did before the crisis. capital adequacy and liquidity are at the center of the discussions. it is important to be aware that less leverage, although beneficial from a prudential perspective, probably implies less potential for economic growth. another important set of initiatives are aimed at modifying the regulatory and supervisory architecture. for example, in some countries discussions are taking place about moving banking supervision under the aegis of central banks. however, at the end of the day, what it is important about a building is not its size or particular style, but whether or not it serves the purpose for which it was built. buildings should be designed according to the particular climate in which they will operate. i would like to share a few thoughts about some of the lessons we have learned during this crisis with regard to the challenges that globalization represents to financial authorities : 1. regulatory and supervisory arbitrage : for any financial regulation to be effective, it is of paramount importance to avoid the sort of regulatory arbitrage that has been taking place to date, such as financial intermediaries ’ practices of booking some of their operations in the places, entities or conduits where they face a more favorable regulatory or supervisory treatment. in this sense, it is crucial to advance in the international harmonization of domestic financial regulations – e. g. resolution regimens, accounting standards, provisioning rules, capital definitions. 2. incentive structure : regulations will not be effective if they do not alter incentive structures. financial markets have some particularities. within these particularities lie the incentives that make them vulnerable. and it seems that actions taken towards correcting some of these vulnerabilities uncover other weaknesses : limited liability and deposit insurance schemes create incentives for more risk taking. the problem is that the growing complexity of the financial system, as well as the availability of new instruments ( the products of financial innovation ), considerably complicate the task at hand for regulators. the challenge faced by authorities is to create the right incentives and to understand the motivation behind innovation. 3. large cross - border banks : there is ample agreement that systemically important banks pose a complex challenge to financial stability. a vast stream of literature has always seen as positive the consolidation and expansion of large cross ‐

##2 and in mexico ’ s oilproducing capacity, 3 led to a reduction of fiscal revenues from this source from 8. 8 percent of gdp in 2012 to 3. 8 percent in 2017. 4 uncertainty associated to the possible trajectory of interest rates in the united states, to a significant extent driven by the risks deriving from fiscal expansion in an economy operating around full employment, has been sharper in mexico than in other emes, given tight links with the us economy and a high degree of openness to foreign capital flows. the 2016 presidential election in the united states and its aftermath have resulted in unease regarding the prospects for the economic relationship between the two countries in coming years. the renegotiation of nafta has become a focal point of attention for both domestic and foreign investors, in view of the importance of this agreement for the region, both from an economic and an institutional point of view. the potential economic and political implications of the recently concluded electoral process in mexico, where a new president, congress and several state governors were elected, has also been a source of uncertainty. partly as a result of several of the above factors, the availability of external financing declined significantly, from an annual average above 4 percent of gdp in 2013 - 14, to some 1. 5 percent in 2015 - 17. although the price of the mexican crude oil basket has recovered from the lows registered in early - 2016, this came atop a sharp fall over the previous year and a half, thus resulting in current prices that are still about 30 percent below the peaks of mid - 2014. oil production nearly halved in the last 15 years, from 3. 45 million barrels per day in december 2003 to 1. 87 million barrels per day at present, a drop of 46 percent. although the energy sector reform of 2013 is expected to foster oil output, results are likely to flourish only gradually over coming years. as per the most recent projections ( march 2018 ), public oil revenues are expected to amount to 4. 0 percent of gdp this year. the mexican economy has adjusted to these shocks through a number of channels. chief among them is the significant depreciation of our currency since september 2014 which, in terms of its value vis - a - vis de us dollar, accumulates to date around 46 percent, a metric that at some stages has recorded figures nearing 70 percent. of course, notwithstanding the abovenoted reduction in the pass - through coefficient, this has had important implications for inflation. although