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Mexico: Cash Access after Hurricane Otis

Categories : Cash and Crises, Cash is a contingency and fall-back solution, Cash is efficient
November 22, 2023
Tags : Access to cash, ATMs, Cash and Crises, Humanitarian, Mexico
In October, Hurricane Otis caused widespread devastation in the Pacific port of Acapulco. Mexican authorities and banks launched an effective plan to restore cash access.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

On Wednesday, October 25, Hurricane Otis landed near Acapulco, a port city on the Mexican Pacific coast of more than 852,000 people. Otis’ sustained winds of 265 km (165 mi) per hour and storm surges caused flooding, mudslides, and widespread devastation in Acapulco and nearby areas. As of November 21, at least 49 people were killed, and another 31 were still unaccounted for.

Graph 1. Mexico: Hurricane Otis’s Wind Speeds, October 18-25, 2023

Source: New York Times (2023).

Hurricane Otis transformed from a tropical storm to a Category 5 hurricane in a day, defying all forecasts. The storm’s wind speed increased by 185 km (115 mi) per hour in less than a day, giving little time for authorities to issue warnings to the public (see Graph 1). Otis was the strongest hurricane in the Eastern Pacific to land in the satellite era.

Devastation in Acapulco

Otis caused telephone and internet service outages that persisted days after the hurricane landed.

People in Acapulco went through ransacked stores for water and food.

Acapulco’s tourism infrastructure has taken an enormous toll.

Damage to Cash and Banking Infrastructure

“There was time to rip out an ATM and take it away, so we had vandalization of ATMs. They broke into branches because all security devices are not foolproof. […] If we don’t see a more secure situation, we cannot bring new ATMs […] Then there’s the physical infrastructure side.” – Eduardo Osuna, vice president and general director of BBVA Mexico.

Hurricane Otis damaged at least 30 out of 86 bank branches in Guerrero state, said Julio Carranza Bolívar, president of the Mexican Banks’ Association (ABM).

The cash infrastructure has recovered slowly. As of October 31, bank branches and ATMs had suffered looting for MXN7.3 million, according to the security firm Seguridad y Protección Bancaria (Seproban).

Plan Billetes (Banknotes Plan) Comes to the Rescue

“[Plan Billetes] has been very effective [before] in ensuring, especially at this time, that people get cash, that people feel confident they can access it.” – Julio Carranza Bolívar, ABM president.

Restoring access to cash was critical after Hurricane Otis hit Acapulco, as cash is the dominant payment instrument in Mexico. On October 30, Banco de México (Banxico), the finance ministry (SHCP), Banjército, and the ABM activated the emergency cash distribution plan known as “Plan Billetes” (Banknotes Plan) to provide cash withdrawals while the banking infrastructure recovers. Banxico launched “Plan Billetes” for the first time in September 2017 after an earthquake disrupted banking services in Oaxaca.

“Plan Billetes” sets up cash access points through POS terminals with satellite connections, allowing users to withdraw funds from their bank and welfare benefits accounts.

Survivors in Acapulco made long queues to withdraw cash at Banjército branches.

This post is also available in: Spanish