Banco de México

Founded on September 1, 1925, Banco de México (Banxico) is Mexico's central bank. Obeying a mandate of the 1917 Mexican constitution, Alberto J. Pani, minister of finance under Plutarco Elías Calles, took the political and organizational initiative to order the establishment of a Banco Único de Emisión (Unique Bank of Emission), as the bank was originally known, as an institutional mechanism to control the monetary disorder inherited from the revolution years.

Banco de México immediately held legal control over monetary emissions, but it would take more than six years and a worldwide economic depression for the Mexican central bank to achieve the confidence of the Mexican population. Only after 1931 were the central bank's bills widely accepted by the Mexican public. During the following decades, the Banco de México played an important role in the Mexican model of development, not only regulating monetary supply and the availability of credit, but also funding Mexican government deficits.

During the 1970s and early 1980s, expansive monetary policies and high inflation rates damaged the bank's public credibility. As a result, the government initiated a series of reforms, the most important of which took effect in April 1994: Banco de México was given constitutional autonomy from the executive branch of Mexican government. This reform allowed it to stop funding government deficits and focus its policy instruments on inflation control.

See alsoBanking: Since 1990; Calles, Plutarco Elías.

BIBLIOGRAPHY

Banco de México. Available from http://www.banxico.org.mx.

Cárdenas, Enrique. La hacienda pública y la política económica, 1929–1958. México: Fondo de Cultura Económica, 1994.

Menéndez Romero, Fernando. El Banco de México y la reserva federal de Estados Unidos de América. México: Porrúa, 1994.

                                Sergio Silva-CastaÑeda