This chapter examines the effectiveness and challenges of the State and Municipality Financial Discipline Act (LDFEFM) in Mexico, which aimed to regulate subnational debt. Despite its enactment, the chapter highlights concerns regarding compliance and its impact on debt levels. Key issues include the law's secondary status, potential moral hazard from past bailouts, and challenges in federal monitoring and transparency. Moreover, centralized controls may hinder democratic processes. The chapter offers policy recommendations to address these challenges, emphasizing the need for stronger enforcement mechanisms and transparency in debt management. While focusing on Mexico's experience, the insights are relevant globally, particularly as governments seek to improve their bond markets. The chapter also underscores the importance of studying market dynamics and acknowledging the influence of external factors on government funding.