Discount Banking in Mexico

Abstract

In 2013, the US Department of Justice levied a fine on the multinational bank HSBC for several financial crimes, including the widespread laundering of proceeds from the narcotics trade between Mexico and the United States. Other than establishing the too-big-to-prosecute precedent, the case also provided evidence regarding an academically underappreciated banking practice—money laundering as discount banking. In getting to the heart of this form of financial innovation in reverse, and the key role played by banks in determining money’s value, this article also situates the drug trade and money laundering as a defining characteristic of the North American Free Trade Agreement (NAFTA)-era Mexican economy.

Keywords:

• Discount banking
• Mexico
• money laundering

Notes

Disclosure statement

No potential conflict of interest was reported by the author.

About the author

Wesley C. Marshall teaches in the Department of Economics at the Universidad Autónoma Metropolitana—Iztapalapa in Mexico City, Mexico.

Notes

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