Estimated reading time: 4 minutes

In Mexico, lawmakers have approved a bill regarding electronic transactions involving promissory notes, negotiable instruments, and other financial instruments.

The new legislation, which amends the existing General Law on Negotiable Instruments and Credit Transactions and the General Law of Credit Organizations and Auxiliary Credit Activities, entered into force on 27 March 2024. 

Key features of this legislative overhaul include the legal endorsement of electronic credit instruments, the implementation of an encrypted system for managing certificates of deposit, and the simplification of collection processes through digital means. 

The amendments will reduce paperwork, lower transaction costs, and provide a more straightforward and transparent mechanism for executing and enforcing financial transactions within Mexico.

As a part of this digital shift, the Mexican government has laid out specific provisions for creating, issuing, and transferring digital credit instruments, leveraging technology to fortify data security and transactional integrity. 

Analysts expect the reforms in Mexico to positively impact businesses by easing access to credit, reducing fraudulent activities, expediting legal and commercial transactions, and fostering an inclusive economic environment. Businesses in Mexico will now be able to confidently explore digital transformation as a means of improving processes.

This initiative marks a pivotal step towards digital transformation in Mexico’s financial sector and sets a precedent for legal and regulatory frameworks in the digital era.

Digital document legislation around the world

This strategic move by Mexico reflects a broader global trend towards digitalisation in international finance and commerce, underscoring the importance of adapting to technological advancements to remain competitive and efficient in the digital age. 

The United Nations Commission on International Trade Law (UNCITRAL) has developed its Model Law on Electronic Transferrable Records (MLETR), which provides a suggested pattern for lawmakers to consider adopting as part of their domestic legislation.

According to UNCITRAL, to date, eight jurisdictions have adopted MLETR-based legislation: Bahrain (enacted in 2018), Belize (2021), Kiribati (2021), Papua New Guinea (2022), Paraguay (2021), Singapore (2021), Timor Liste (2024), and Abu Dhabi Global Market (2021).

In the UK, the Electronic Trade Documents Act (ETDA), officially enacted in July 2023, is another digitally-enabling piece of legislation that was influenced by the model law and the principles on which it is based.

This increasing adoption of electronic document-friendly legislation in jurisdictions worldwide indicates a significant shift towards legal recognition of digital trade documents and helps to provide the legal backing necessary for the widespread adoption of digital instruments in trade finance. 

This shift will continue, with more countries likely to adopt similar legislation in the coming years, providing further support for the growth of digital trade and the smooth and efficient exchange of digital documents between parties.

International trade in Mexico

Mexico is a significant player in international trade, leveraging its geographic location to bridge North and South America and its vast network of free trade agreements to facilitate access to global markets. 

According to data from the Observatory of Economic Complexity (OEC), in 2022, Mexico exported a total of $549 billion, making it the 10th largest exporter in the world. Over three-quarters ($421 billion) of its exports were to the USA. 

Mexico is also the USA’s second latest export market (behind only Canada), as the nation purchased $294 billion from its northern neighbour and fellow USMCA member in 2022. 

This extensive engagement in global trade underscores Mexico’s role in international commerce and highlights the importance of the latest electronic financial document legislation for the global economy.

These latest legislative advancements in digital commerce will significantly amend Mexico’s financial transaction regulations, impacting trade finance and e-commerce within the country and eventually abroad. 

By embracing electronic versions of traditional financial instruments such as promissory notes, checks, and bills of exchange, Mexico aims to modernise and streamline commercial transactions. 

This transition promises enhanced efficiency and security and introduces a robust framework for blockchain technology to ensure transparency, traceability, and integrity of financial documents.

With its latest legislative reforms, Mexico is taking significant steps towards digitising its financial sector, aiming for improvements in efficiency and security across financial transactions. 

These changes highlight Mexico’s commitment to technological innovation, offering a model that could influence global practices in digital finance and trade. 

As Mexico moves forward, its efforts could lead to broader acceptance of digital financial practices, benefiting its economy and position in international trade.