Background on the Mexican Monetary Authorities and Their New Coin Initiative
The Casa de Moneda de México (CMM) and Banco de México (Banxico) are collaborating to produce new 1, 2, and 5 peso coins that will be more environmentally friendly and cost-effective. This initiative is part of the Institutional Program 2025-2030, which aims to transition from the current bronze-aluminum alloy to steel cores coated with bronze. This change will also coincide with the federal government’s efforts to promote digitalization and reduce cash usage in Mexico.
Current Cash Demand and Digitalization Trends
Mexico experiences a high demand for cash, with approximately 3.3 trillion pesos in circulation daily. This figure represents a 200% increase over the past decade, despite growing financial digitalization. The new coin initiative aligns with global trends, as countries like Canada and those in the Eurozone have adopted steel-coated coins to support a circular economy, reduce carbon footprints, and promote responsible sourcing practices.
Cost Reduction and Environmental Benefits
The transition to steel-coated coins is expected to decrease production costs by 300 to 400 million pesos, primarily due to reduced metal acquisition expenses. The CMM emphasizes the importance of Environmental, Social, and Governance (ESG) criteria in their coin production process. These criteria aim to minimize carbon footprints, conserve water, and lessen environmental impact.
Future of Cash in Mexico
Despite the rise in digital transactions worldwide, expected to triple by 2030, cash is projected to remain the dominant payment method in retail transactions, especially in developing economies with high vulnerable populations, limited financial infrastructure, and low financial penetration.
In Mexico, cash demand is anticipated to grow due to precautionary reasons, expanding informal economy, increased remittances from the United States, and low financial penetration—only 49% of adults have bank accounts.
Key Questions and Answers
- What is the main initiative? The CMM and Banxico are producing new 1, 2, and 5 peso coins using steel cores coated with bronze, which are more eco-friendly and cost-effective.
- Why is this change important? This transition aligns with global trends towards sustainable materials and supports a circular economy, reducing carbon footprints and promoting responsible sourcing.
- How will this affect cash usage in Mexico? Although digital transactions are increasing globally, cash is expected to remain the primary payment method in Mexico due to precautionary reasons, informal economy growth, and limited financial penetration.
