Modification to the Interbank Equilibrium Interest Rate (TIIE): Impact on the Mexican Financial Market

On December 15, 2024, the Bank of Mexico (Banxico) announced an important modification in the methodology for the calculation of the Equilibrium Interbank Interest Rate (Tasa de Interés Interbancaria, TIIE), the main reference for the determination of interest rates in financial operations in Mexico. This update responds to changes in international markets, technological developments and the need to adapt the rate to more robust and transparent standards, aligned with international practices.

Financial institutions will be prohibited from using the 28-day TIIE as of January 1, 2025.

The new methodology prioritizes the use of actual transaction data over quotes provided by banks. This includes operations carried out in the interbank market and on electronic platforms.

This modification seeks to more accurately reflect real market conditions, minimizing the possibility of manipulation. The use of real market data will strengthen confidence in the TIIE as a reliable and representative indicator, aligning it with international standards such as those adopted for the transition from LIBOR to SOFR (Secured Overnight Financing Rate) in global markets.

What is the TIIE and why is it important?

The TIIE is the reference rate published daily by Banxico and used in financial contracts such as bank loans, debt issues and derivatives. Its calculation is based on quotes provided by financial institutions, reflecting money market conditions for terms of 28, 91 and 182 days.