International Law and Mexican Banking Regulation

AutorKaren B. Sigmond
CargoPhD and LLM from Tulane University School of Law, J.D. from the University of San Diego School of Law. Professor of Law, School of Government and Public Transformation, Tecnológico de Monterrey
JURÍPOLIS, año 2015, No. 17 25
International Law and Mexican Banking Regulation
Karen B. Sigmond1
Abstract: This work describes the relationship between international law and
national law in banking regulation. It describes banking history in Mexico, the
role of international financial organizations (International Monetary Fund, World
Bank, and the Bank for International Settlements) in times of economic crisis
and the impact of international loans and policy recommendations on domestic
law. International free trade agreements are also explored as they relate to banking
Key words: International law, banking regulation, free trade agreements, interna-
tional financial organizations, economic crisis.
The discussion of the relationship between international law and domestic
law has increased significantly in Mexico. In recent years there appears to be an
extensive movement towards the incorporation of International Law into the
Mexican legal system. The modification to Article 1 of the Mexican Political
Constitution of June 10, 2011, on the topic of human rights, has caused a re-
newed interest in international law and an increase in the analysis of the inter-
play between external and internal law. However, the law of nations has been
present at every step of Mexican history in many regards. For example, in trade
law there have been extensive internal reforms to Mexican laws in the last three
decades based on international commitments acquired through international
Additionally, we can trace Mexico’s participation in international organiza-
tions such as the United Nations, back to the beginning of the 20th Century, not
to mention treaties dating back to the creation of Mexico as a nation-state. Howe-
1 PhD and LLM from Tulane University School of Law, J.D. from the University of San Die-
go School of Law. Professor of Law, School of Government and Public Transformation, Tecnoló-
gico de Monterrey.
26 Karen B. Sigmond
JURÍPOLIS, año 2015, No. 17
ver, this work will focus on a discussion of another type, but of great importance
to most, if not all, Mexicans. It will survey the reception of International Law in
the area of banking. This may not appear to be as important as human rights, but
the lifeblood of the national economy runs in part through the banks that pump
loans into the national production and, therefore, keep the economy alive (or kill
it in times of crisis). This in turn affects every person within the national borders.
Consequently, as demonstrated by the most recent financial crisis, what happens
beyond our borders affects each and every one of us and, some argue, a better
regulation of services across borders is desired. Others indicate that the “invisible
hand of the market” should rule.
Consequently, Part I of this work provides a short historical survey of Mexi-
can banking history. Part II addresses the main international financial organiza-
tions and their role in times of crisis, particularly in the Mexican context. Part III
then analyzes the function of international financial organizations in changing in-
ternal law. Part IV briefly addresses the 2008 economic crisis as a catalyzer for
the further development of international standards for financial regulation and the
impact of such on banking regulation. Part V briefly introduces the Trans-Pacific
Partnership and it is followed by concluding thoughts.
I. Banking Regulation – Background
Historical Survey
A quick historical survey of the banking system in Mexico takes us back to
the period starting with the administration of Porfirio Diaz (1876-1910). This stage
in Mexican history was marked by the industrialization process, strongly promo-
ted by Díaz himself, and an increase in economic development. This develop-
ment led to an increase in banking activity, as financial services were needed to
fund new industrial projects. As in many cases, the law reacted to a need that
to some degree was being regulated and controlled by market forces. Therefore,
banking regulations followed.
However, in the case of Mexico, the regulations responded in great measure
to political needs, rather than market needs. This reaction did not change for at
least a century of Mexican history. Nonetheless, the changes in modern Mexican
internal banking laws, as in other areas of law, have been due to the relation to
international law. And yet, in the development of banking regulation there have
been critical moments where internal political, economic, and other forces have led
2 See SIGMOND, Karen B., Mexican Banking Laws: Evolution into NAFTA and the Global Economy,
VDM 2008.

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