Mexican lawmakers to debate divisive central bank bill on Tuesday

MEXICO CITY: The lower house of Mexico's Congress on Tuesday will debate a hotly contested bill that critics say would force Mexico's central bank to absorb money from drug gangs, lawmakers said on Monday, and the measure could go to a vote the same day.

The Bank of Mexico (Banxico) and some lawmakers, including members of the ruling National Regeneration Movement (MORENA), had pushed for debate on the proposal to be delayed until Congress begins a new session in February.

Supporters say the law would help Mexicans with poor access to the financial system, such as migrants and hospitality sector workers paid in dollars, to save cash.

Critics, including Central Bank Governor Alejandro Diaz de Leon, say it could force Banxico to launder money and get the bank in trouble with international authorities.

Ratings agency Moody's warned late on Monday that the reform would be "credit negative" for the sovereign because it would compromise the bank's autonomy in a country that ranks relatively low in rule of law and control of corruption.

"Compromising the central bank's autonomy would undermine the cornerstone of Mexico's macroeconomic stability," Moody's said in a report.

An agenda published by the lower house on Monday said the Banxico bill was on the list of pending legislation scheduled to be dealt with on Tuesday, the final day of the current period.

Congressional sources said that meant the bill could be put to a vote the same day.

The agenda also included another bill that seeks to impose tougher rules on foreign agents in Mexico. The agenda triggered a new round of comments from leading public figures urging caution.

Santiago Nieto, the head of Mexico's financial intelligence unit (UIF) that is part of the finance ministry, called for "a broader and more technical discussion" of the reform, although without specifying if he was in favor of postponing the debate.

He also said that the UIF and the national banking commission (CNBV) have "sufficient institutional strength" to fight and prevent money laundering.

Jonathan Heath, a Banxico board member, noted on Twitter that financial institutions were also broadly against the bill, with the exception of one, which he did not name.

Mexican billionaire Ricardo Salinas, whose banking arm Banco Azteca is used by many Mexicans to change dollars, has said he supports the reform.

In Heath's previous tweets criticizing the bill, he appeared to suggest it would unfairly favor Banco Azteca.

Lawmakers backing the Banxico bill at the weekend suggested they were open to reviewing the initiative.

It remains unclear what steps the lower house could ultimately take on Tuesday.

Last week, Mexico's Senate passed the draft law that would make Banxico buy up foreign cash that commercial banks cannot return to its country of origin, causing a wobble in the peso currency.