Bank of Mexico focuses on strategy to purchase government debt

Until now, the Bank of Mexico (BdeM) has been responsible for managing the sale of government debt through auctions of instruments such as Cetes, Bonos M, Bondes F, Udibonos, and BREMs, with the aim of regulating liquidity in the financial system. However, it recently made changes to the rules governing Monetary Regulation Bond auctions and announced that it would also begin purchasing government securities.

This announcement sparked speculation about whether this mechanism was a way to provide under-the-table financing to the federal government, which, through the Ministry of Finance, faces the challenge of reducing the public deficit—which reached its highest level in three decades in 2024—before credit rating agencies further downgrade the country’s credit profile.

As part of this speculation, it was suggested that the measure constituted a monetary stimulus program—known as quantitative easing—which is used to stimulate a stagnant economy.

Among the most significant changes is that the channel for purchasing government securities is no longer limited to banks; brokerage firms, investment companies, and SIEFORES will also have access to repurchase agreements, which will address the shortage of collateral held by banks.

Although it is generally accepted from an economic standpoint that the central bank’s access to a broader range of instruments strengthens its ability to respond to episodes of financial volatility—especially in an international environment characterized by high uncertainty—the true test will be how these tools are actually used.