Kamis, 20 Oktober 2016

Daily Business Report

Daily Business Report

Mexico Orders Banks To "Stress Test" For A Trump Victory

Posted: 20 Oct 2016 06:13 AM PDT

It's official: Donald Trump is now a systemic threat.

As part of the Mexican stress test, alongside more traditional calamities such as recession, economic crisis, and market crash, the Mexican financial authorities have ordered local banks to assess the potential impact of Donald Trump winning the U.S. presidential election, Reuters reports. Citing six bank sources, Reuters says that alongside a "normal" annual stress test, the banks were asked to conduct an additional test to examine the macroeconomic effects and volatility resulting from a potential Trump victory on Nov. 8.

The local regulator, the Financial System Stability Board (CESF) said that as a result of the ongoing risk surrounding the U.S. election and an expected tightening in Federal Reserve monetary policy, it had examined the results of stress tests of the country's financial system. "These exercises showed that the banking sector maintains adequate levels of capital and liquidity to face adverse scenarios," the CESF, which includes representatives from the Finance Ministry, the Bank of Mexico and the banking regulator CNBV, said in its statement.

However, while the rest of the stress test is largely fluff, what Mexico really wanted to know is what happens to local banks if Trump becomes president in 19 days: as a result the tests "were specifically aimed at modeling the possible impact of a Trump victory over Democratic candidate Hillary Clinton, the latest example of the panic the Republican candidates campaign has induced in Mexico."

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