The Bank of Mexico (), abbreviated BdeM or Banxico, is Mexico's central bank, monetary authority and lender of last resort. The Bank of Mexico is autonomous in exercising its functions, and its main objective is to achieve stability in the purchasing power of the national currency.

Background

Plans for a central bank of Mexico began as early as the Mexican Empire of Emperor Agustín de Iturbide with his idea of a Gran Banco del Imperio Mexicano (Grand Bank of the Mexican Empire). This idea was never pursued, instead, credit was generally issued by religious orders or trading guilds. In 1827, Mexico defaulted on a loan from British lenders which made it difficult to find foreign capital and it was forced to rely on local lenders as it had no national bank to lend to it. Instead the government was forced to rely on domestic lenders known as agiotistas (speculators) who specialized in short-term, high-interest loans.

The first formal bank organized by the government was the Banco de Avío which was formed in 1830 during the presidency of Anastasio Bustamante under the direction of the Minister of Interior and Foreign Affairs, Lucas Alamán. The primary purpose of the bank was to stimulate the manufacturing and textile industries. Its success was confined mainly to the latter, but due to ongoing political and military crises the bank was eventually closed in 1842 by President Antonio López de Santa Anna.

In 1884, the Banco Nacional Mexicano soon merged with Banco Mercantil Mexicano (Mexican Mercantile Bank) to form the Banco Nacional de México (National Bank of Mexico) which issued notes and was the primary lender to the government. The same year government issued a commercial code that gave it control of the banking sector, including the responsibility of chartering banks and establishing minimum levels of capital. The new code also stipulated that all paper money had to be backed by gold or silver on deposit in the national treasury. The law prevented banks from owning stock in other banks and eliminated the stock exemption for banks. Most importantly, the law called for the creation of a central bank. It was given exclusive authority to mint coins and print banknotes, a sharp departure from policies of the past. The bank was also given responsibility over exchange rates, interest rates, and monetary regulation. Initially, retail banks even had the option not to partner with Banco de México. The main goals of the Bank at that time were to unify the fractured banking system left behind by the Revolution, create a flexible financial system that could modernize the country, reestablish credit, and renew trust in paper money.

See also

  • Economy of Mexico
  • Economic history of Mexico
  • List of central banks
  • Mexican peso

Notes

Sources

  • Banking in Mexico (in English)