Dr. Shapiro Delivers Testimony Before the Mexican Senate on Impacts of De-Risking on Mexico


At an event recently held by the Mexican Legislature, the United States and Mexican political officials discussed the importance of correspondent banking and the harmful impact of de-risking policies on the U.S.-Mexico relationship.


MEXICO CITYDATE On September 28, Dr. Robert J. Shapiro, author of a groundbreaking analysis, testified before the Mexican legislature to talk about the importance of correspondent banking and the harmful impact of de-risking policies on the U.S.-Mexico relationship. The event raised important issues among many of Mexico’s top financial and foreign policy leaders.


Sponsored by the Texas Association of Business (TAB), Dr. Shapiro’s analysis found that Mexico’s exports to the United States slowed by $74 billion from 2011 to 2021, diminishing U.S. employment growth by 114,000 jobs. The lack of correspondent relationships prevents access to secure remittance transitions from the U.S. to Mexico for those with a low income and marginal access to banking.


Dr. Shapiro’s testimony in Mexico City reflects the rising tide of discontent with outdated de-risking policies. His remarks were echoed by Professor Rafael Fernande De Castro from the University of California at San Diego and Professor and former legislator Jorge Calderon from UNAM School of Economics. Professors De Castro and Calderon emphasized that foreign direct investment (FDI) slowed by $480 million, reducing growth in the stock of FDI in the U.S. by an average of 3.3 billion in a given year.


At a hearing held in September by the House Financial Services Committee, which discussed the impact of de-risking policies and the decline of correspondent banking relationships in CARICOM countries, Rep. Sylvia Garcia (D-TX) introduced Dr. Shapiro’s report and spoke about how the issue heavily impacts many countries worldwide, including Mexico. The House Financial Services Committee plans to prepare and draw additional attention to the issue and its impacts in the next Congress. At the end of the year, the Government Accountability Office (GAO) is also preparing to release a report on correspondent banking addressing issues related to de-risking regulation and its outcomes.


With many analysts forecasting an economic downturn there is a renewed importance on taking proactive measures to increase access to banking and enable cross-border transactions between international trading partners. Improved de-risking regulation is important to ensure that correspondent banking can occur in the international community.


“There are about $50 billion a year in remittances that are sent from the United States to Mexico, and when they occur through correspondent banking participants on both sides, the person who sends the remittance and the person who receives it becomes a customer of the bank, and as a customer of the bank, they have access to checking accounts, savings accounts, and loans. If you force them out of the banking system and into, say, a Western Union, then they are not integrated into the financial system and all the services that banks provide,” said Dr. Robert J. Shapiro.


As de-risking and its impact on correspondent banking continues to be discussed, Texas businesses continue to be an integral part of the conversation to guarantee that strong correspondent banking relationships between the United States and Mexico can facilitate the cross-border business and trade that our country thrives on.


Dr. Shapiro’s full remarks, those of other speakers, and the question and answer session can be found by clicking here.