Transition of the Interbank Equilibrium Interest Rate (TIIE) of 28 Days to Funding TIIE: A Critical Analysis of the Adjustment Differential and its Implications for the Mexican Money Market

Abstract

In line with global best practices for benchmark indices, the Bank of Mexico undertook the transition from the 28-day Interbank Equilibrium Interest Rate (TIIE 28-day) to the Funding TIIE. This study conducts an empirical analysis of the adjustment spread between both rates, demonstrating that this is not a simple difference but a stable equilibrium link that reflects historically perceived credit and liquidity risk premiums. The proximity between the empirically calculated spread (24.64 basis points) and the official one (24 basis points) validates the technical rigor of Banxico's decision but also underscores an alignment with a global paradigm that warrants a critical look at its implications for market power, distributive effects, and monetary policy sovereignty.