s economic growth in 2013 will be slightly lower than that of the previous year, with a recovery occurring in 2014. 2 there are both downside as well as upside risks to this scenario. a fiscal adjustment in the united states applied in a disorderly way or lacking credibility, or a complication in policy implementation in the eurozone that augments financial uncertainty, stand out as possible negative external factors. however, the recovery in the united states may be faster than forecast, and investor confidence in mexico could increase as a result of progress on structural reforms favoring long - term growth. capital inflows and benign financial conditions during the last four years, the yield curve in mexico has successively shifted downward, a process that has continued so far this year, leaving current interest rates for all terms close to or at their all - time lows. aside from variations due to changes in risk aversion, the main driving force for these shifts has been almost synchronic shifts in the u. s. yield curve, resulting from the different stages of monetary easing there. the main transmission mechanism for lower interest rates has come from persistent capital inflows. as in other emerging economies, mexico has received substantial capital flows from foreign investors seeking higher yields in both equity and bond markets. also, foreign investors may feel more confident about the mexican economy because of its sound macroeconomic and financial fundamentals, the openness of its capital account, the flexibility and depth of its foreign exchange market, and higher expectations for structural reforms, among other factors. as a result, from 2009 to 2012, the proportion of non - equity financial assets held by foreigners relative to the broadest monetary aggregate, m4, increased from five to seventeen percent. there are indications that inflows have speeded up during the current year in many emerging economies, including mexico. expected growth is 3. 6 percent for 2013 and 4. 0 percent for 2014. see banco de mexico ( 2013 ), “ encuesta sobre las expectativas de los especialistas en economia del sector privado, ” january. bis central bankers ’ speeches the abundance of foreign savings was supportive of mexico ’ s recent economic growth. however, the possibility of a change in the perceived conditions that gave rise to the inflows makes it likely for those flows to stop and even revert. such reversals have occurred on innumerable occasions in many countries, including mexico, for reasons not necessarily related to the

currently. 2 • economic and financial globalization has been one of the main characteristics of the world economy in recent years. this has been the source of many benefits, but it has also been accompanied by new challenges. in particular, as the global financial crisis ( gfc ) has clearly shown, the growing interdependence that has resulted from globalization means the economic problems of one country can be rapidly transmitted to others. in this context, policy options that are apparently reasonable shares based on ppp ‐ adjusted figures for gdp. figures provided by, or calculated with data from, international monetary fund ( 2015 ) : world economic outlook database, october. see also mohan, rakesh and muneesh kapur ( 2015 ) : “ emerging powers and global governance : whither the imf? ”, imf working paper no. wp / 15 / 219, october. bis central bankers ’ speeches at the national level are not necessarily so when adopting a global vision. therefore, a highly globalized world presents the typical prisoner ’ s dilemma, where a non ‐ cooperative approach leads to poorer results for all the parties involved as opposed to one based on cooperation. in other words, the nature of today ’ s challenges underscores the need for a framework of global governance with a much higher level of cooperation and, consequently, a level playing field. • the gfc brought to the forefront many of the limitations of the governance framework in place. to start with, it showed that contrary to the then prevailing views, advanced economies ( aes ) are at least as vulnerable to crises as emes. it also made clear that no effective mechanisms were in place to ensure consistency between the economic policies in the main advanced countries and global economic and financial stability. naturally, this gave rise to serious concerns about the legitimacy of the existing global economic governance arrangements. to put it in jean ‐ claude trichet ’ s words, “ … the industrialized countries have proven particularly clumsy in their handling of global finance before the crisis at a time when their responsibility in global governance was obviously overwhelming. there was therefore no reason to confirm their exclusive prime responsibility ”. 3 the gfc sparked an effort of cooperation of the international community, unprecedented in terms of its complexity and reach, which allowed to prevent the collapse of the global financial system. in addition, as a result of the crisis, major steps were taken to adjust the global economic governance structure. in particular, emes were given a more prominent role in the global decision