Banco de México Financial Stability Report Highlights Transition Risks from Low-Carbon Economy Shift

Banco de México published its Financial Stability Report for December 2025, with a dedicated section examining the transition risks associated with the global shift towards a low-carbon economy and their implications for Mexico's financial system. Released on 10 December 2025, the report described transition risks as those associated with the economic, regulatory and technological adjustments needed to move to a low-emission economy, and found that banks' credit-portfolio exposure to transition risks had decreased across all sector groups.

THREE SECTOR GROUPS

The report grouped sectors vulnerable to transition dynamics into three categories. Group 1 consists of directly high-emission sectors. Group 2 encompasses sectors that are indirectly exposed because they rely on high-emission inputs. Group 3 covers firms whose demand is linked to the performance of greenhouse-gas-emitting sectors. The largest decline in bank exposure occurred in Group 1, followed by Groups 2 and 3.

SYSTEMIC IMPORTANCE DESIGNATION ALSO NOTED

Separately, the December report recorded that the CNBV, Mexico's banking and securities regulator, had designated Banco Citi Mexico as a Domestic Systemically Important Bank in April 2025. The DSIB designation carries enhanced regulatory requirements, including additional capital buffers.