The departure of Espinosa, several specialists consulted point out, will leave a Governing Board marked by members related to the government, and they raise the doubt that the central bank could lose its autonomy. Furthermore, it is perceived that the organization has stopped being an opinion leader as it was in the times of Agustín Carstens. “In recent years he has been more shy about what he did before, which is being a leader of public opinion on the issues that concern him.” [a sus integrantes]”, considers Sergio Kurczyn, director of economic studies at Citibanamex.
This perception, the interviewees add, is due to what they point out as a lack of experience. And Carstens had experience in international organizations, in addition to the government. He worked as deputy director at the International Monetary Fund and was Secretary of the Treasury under Vicente Fox and Felipe Calderón. His recognition reached the point that when increases to the minimum wage were discussed, Carstens maintained that increasing it would generate inflationary pressures, and his opinion was supported by the deputy governors of Banxico and considered valid for not making adjustments.
Jonathan Heath himself, who would later become deputy governor of the central bank, came out to refute Carstens’ theory. “The study [del exsecretario de Hacienda] It was something that could not be defended in any seminar at any university,” recalls Luis Monroy Franco, researcher at the Espinosa Yglesias Study Center.
Under López Obrador, the adjustments to the minimum wage were made throughout the six-year term and no one within the Government Board spoke out against it.
“Something that the Bank of Mexico suffered from was a high degree of endogamy. At certain times, the board was made up of either people who spent their entire career in the central bank or graduates of the same institution or people who spent their entire career in the Treasury,” Monroy points out.
For Kurczyn, the lack of current experience has also had an impact on regulation and key decisions. “The Bank of Mexico has not taken seriously its promise that by 2025 there would be a central bank digital currency (CBDC), a digital peso. In my evaluation there has been a lack of leadership, raising important issues that concern them, not to mention digital currency, but also minimum wage and inflation; also fiscal and warming of the economy,” he says.
“These are issues that have to do with them and I have seen them too timid. That is not good for the economy, it is always good to have references that set the tone for where we are and where we want to go in terms of growth,” he highlights.
The relevance of autonomy
Obtaining autonomy involved more than changes in the law of the Bank of Mexico. The decision was a response to the high inflation that Mexico experienced, up to triple digits. In 1993, changes to the Constitution and the secondary law were approved, which began in April 1994. It was determined that the objective of the Bank of Mexico would be to maintain inflation at 3% with a margin of variability of one percentage point upwards and downwards. low.
“In addition, it was explicitly positioned as a counterweight to the decisions of the federal government and a prohibition was established on the State being able to force the central bank to lend it money,” notes the Citibanamex note ’30 years of autonomy of Banxico: origins, evaluation and challenges’.
The bank highlights in the document that there is evidence that giving autonomy to central banks is a good pragmatic solution to control inflation with the lowest possible cost for growth, and that, by increasing the credibility of the organization, it can be promoted further. measure a policy that contributes to stabilizing GDP growth around its long-term potential.
There are four ways to measure the autonomy of a central bank: legal autonomy, independence of the Governing Board of the central bank from the government, independence in monetary policy and the type of mandate, which in the case of Mexico is unique, contain inflation.
Interviewed recently, the still deputy governor Irene Espinosa said that she never perceived that the central bank could be violated of its autonomy and this was thanks to the legal and legal framework under which it was designed.
Banxico’s transparency
Transparency has been key at Banco de México to help investors and specialists understand the country’s economic context. “We have seen the evolution of the central bank in its way of communicating with the public and it has to do with an effort to generate greater credibility, by making the monetary policy decision-making process much clearer within the governing board. ”says Monroy.
For a central bank to function properly, experts say, there must also be dissenting voices. Although in the first years of autonomy the profiles were similar, Luis Monroy highlights that there was a watershed in 2019: when López Obrador began his mandate and the then Secretary of the Treasury, Carlos Urzúa, advised the president to propose two autonomous profiles to Banxico and , to a certain extent, to the government: Jonathan Heath and Gerardo Esquivel. The first was a renowned economist and academic, he worked in financial institutions as a consultant, while the second has had a long academic career.
“These appointments are different from those that followed him and those that preceded him, in the sense that there was recognition of people from other spaces in the governing board and that it did not necessarily come directly from the Ministry of Finance or from any entity. linked to the government,” Monroy highlights.
Adrián de la Garza, economist and former researcher at Banxico, adds that the diversity of profiles helps to better analyze and understand the Mexican economy. “We have seen in other countries that there are members who have worked in other central banks and who join the governing board of a third country, for example, in England,” he points out.
Monroy identifies the nomination of Heath and Esquivel as a “brief moment of respite” to open the bank and the nominations to a much more plural process and to recognize that there was experience outside the organization and the Ministry of the Treasury. “Unfortunately, it is a space that seems to have already been closed,” he adds, and maintains that the profiles that arrived later correspond to second-level people in the Treasury.
Another factor against that experts such as Gabriel Reyes, who was pro-secretary of the Banxico Government Board, have detected is that since 2019, with the law that determines that no official should receive a salary higher than that of the president, it caused officials of high level will resign or advance their retirements. “In the Bank of Mexico for three or four years, the second levels have already retired due to this problem. So what is happening to the experts at the Bank of Mexico? “They have all retired,” says Reyes.
The expert highlights that career Bank of Mexico officials are “an endangered species” and that this does not help the profiles with little experience that exist in the current Governing Board.
“All those who were part of the first Governing Boards are people who came from the Bank of Mexico itself and later began to arrive from Banamex and Bancomer, but the structure of the Bank of Mexico supported the inadequacies and deficiencies of some of those appointed. They were not necessarily the best,” he adds.
Gabriel Casillas, chief economist for Latin America at Barclays and former collaborator at Banxico, highlights that the governing board needs a member who has had extensive experience within the central bank, because not all debates are monetary policy. “There are many central banking debates that when someone works at the Bank of Mexico investigates in depth, for example, what is the optimal level of international reserves; What is the best monetary policy regime, whether inflation objectives or inflation forecast objectives; how to carry out these inflation forecasts, if gold has to be within the International Reserves, etc. You can breathe all this when you work at the Bank of Mexico,” he says.
With the departure of Irene Espinosa, experts agree that the best option would be to nominate someone who has already worked at Banxico or who has experience in monetary policy and, in the best case, ratify her in the position. “Yes, we have seen a change in the composition of the members of the governing board,” says de la Garza. “Thinking that now we do not have any profile with a doctorate in Economics, for example, that does differ from what we saw in other previous periods and from what we see in other central banks of the most important in the world.”
