What name is given to Mexico’s 1994–1995 currency and financial-market collapse?

Mexico’s 1994–1995 currency and financial-market collapse is known as the Mexican peso crisis.

The crisis began after Mexico devalued the peso in December 1994, shortly after President Ernesto Zedillo took office. Investors withdrew capital, the peso lost much of its value, and Mexico faced difficulty refinancing short-term dollar-linked obligations known as tesobonos.

The shock damaged Mexican banks, businesses, and stock prices. The United States and international institutions organized a large rescue package, helping Mexico meet its obligations and stabilize the financial system. Mexico later returned to growth, but the episode caused a sharp recession and a major decline in living standards.

The crisis is also called the Tequila Crisis, especially in economic writing. “Mexican peso crisis” is the more direct name because it identifies the currency at the center of the event. It should not be confused with Mexico’s 1982 debt crisis.