Carstens Calls for Faster Financial Digitalization Without Undermining Trust in the System
Fintech innovation in Mexico is moving forward, but the central challenge remains modernizing payments and digital money with clear rules that protect users.
Agustín Carstens, former governor of the Bank of Mexico (Banxico) and former general manager of the Bank for International Settlements (BIS), urged fintech companies to drive innovation without compromising the trust that underpins the financial system. In an environment where digitalization is accelerating and the range of products is multiplying—from instant payments to cryptoassets—Carstens stressed that regulation is not a arbitrary obstacle, but rather a response shaped by history: crises and failures that have revealed the economic cost of losing credibility in intermediaries, payment infrastructure, and savings mechanisms.
The diagnosis points to a familiar tension: while other sectors have adopted technology at breakneck speed, finance tends to move cautiously because of the systemic risk involved in “breaking things” in an industry where mistakes translate into lost savings, fraud, or disruptions to essential services. For Carstens, modernization cannot wait, but it requires an architecture that preserves operational security, service continuity, and consumer protection—backed by verifiable standards and effective oversight.
In Mexico, this debate is playing out at a time when the use of digital payments continues to rise, fueled by immediate transfers and greater financial inclusion, even as a strong preference for cash persists across large parts of the economy. The access gap—differences by region, income, and connectivity—coexists with growing demand for cheaper, faster ways to pay, get paid, and send money, especially among small businesses and independent workers.
Carstens also reiterated his skepticism about stablecoins as full substitutes for traditional money. His core argument is that many of these coins do not consistently fulfill the three classic functions of money—medium of exchange, unit of account, and store of value—and that if they are to be integrated into a mass payment system, it must be under strict rules on transparency, reserves, liquidity management, and regulatory scrutiny.
Mexico’s Dilemma: Fast Innovation, Strong Infrastructure, and a Level Playing Field
Mexico’s experience shows that technology adoption can move quickly when there is infrastructure and trust: more agile payment systems have reduced friction and allowed businesses and individuals to move funds at lower cost. However, the growth of new players also raises the stakes: cybersecurity, identity theft, operational failures, customer-service quality, and risks tied to business models that rely on short-term funding. In this context, the discussion around “digital money”—whether issued by the central bank, commercial banks, or private platforms—becomes a conversation about standards: who is accountable for a loss, how savers are protected, how auditable reserves are, and how contingencies are handled without threatening system stability.
Carstens’ approach points to an ecosystem where different types of money coexist: cash and central bank digital money for the public, wholesale instruments to connect institutions, and commercial bank money for everyday use—leaving limited room for stablecoins, provided they comply with rules that reduce risks. For Mexico, where financial inclusion remains a public policy goal, the value of this proposal is that it emphasizes interoperability and trust: systems that can communicate with each other, lower costs, and give end users legal and operational certainty.
From a macroeconomic perspective, financial modernization is also unfolding in an environment where the fight against inflation, exchange-rate stability, and the cost of credit shape appetite for innovation. When rates are high, financing becomes more expensive and fintech firms face a tougher environment to raise capital and scale; when growth slows, households’ and businesses’ priority tends to be liquidity and security. In that sense, the trust Carstens refers to is not only reputational—it is also an economic asset that lowers risk premiums, facilitates intermediation, and supports investment.
On the regulatory front, the message is also aimed at authorities and supervisors: enable renewal without letting go of control. For innovation to translate into productivity rather than vulnerabilities, the challenge is to update supervisory frameworks, demand better risk-management practices, and ensure a level playing field between banks and new entrants—avoiding regulatory arbitrage that encourages growth in activities outside the oversight perimeter.
Looking ahead, Mexico faces a twofold opportunity: use technology to expand access to financial services and reduce payment costs, while also raising standards for security and transparency. The balance Carstens proposes—innovating with rules—suggests that digital transformation will be sustainable only if users believe their money is protected and that the system responds quickly to failures, fraud, or market shocks.
