Section II of article 39 of the Bank of Mexico Law establishes with precision that to be a member of the Central Bank Governing Board it is necessary to “have recognized competence in monetary matters (I underline), as well as having occupied, therefore, at least for five years, high-level positions in the Mexican financial system or in the agencies, agencies or institutions that exercise authority in financial matters ”.
President López Obrador’s proposal for Victoria Rodríguez Ceja to be a member of the Governing Board of the Bank of Mexico and also assume the position of Governor of this, does not meet the first requirement, which is not optional. So much so that in the document by which the head of the Executive proposes his appointment to the Senate of the Republic, he expressly omits to prove the fulfillment of the recognized competence in monetary matters by the designated official. It is not a gender issue, it just does not meet the requirement. The fact that she has carried out the function of planning and implementing the exercise of spending for years has nothing to do with this requirement, a specialty in which she undoubtedly has extensive experience.
Now, why is this competition so relevant in monetary matters? Well, simply because it is the fundamental task of the Bank of Mexico. Announcements by a central bank about decisions made by its governing body, in this case the Governing Board, have real-time effects on the exchange rate or price of public sector debt instruments.
In the context of central banks, the attribute of autonomy is essential to be able to effectively carry out the mandate entrusted to it by the legal framework. But autonomy is not a sufficient factor. It is widely demonstrated that in order to generate confidence in the markets and investors, a central bank must build a good reputation, for this it must first be consistent in the decisions it adopts, that when they adhere to the commitments to follow certain rules and adhere to certain policy goals, translate into credibility.
Any hesitation, either in making decisions or communicating them, can trigger periods of high volatility that can throw away any recent improvement in a country’s macroeconomic indicators, and worse still, in household welfare. Therefore, competition in monetary matters is required.
Unfortunately, something that has justly characterized Q4 is its disregard for both rules and adherence to commitments, and for its consistent approach to questioning the importance of autonomous institutions. And there are the various examples that began with the cancellation of the construction of the Mexico City International Airport in Texcoco, the practically unilateral renegotiation of the long-term contracts of the gas pipelines, the arbitrary cancellation of the permits for the brewing plant in Mexicali or the arbitrary modification of the shipping rates for the use of the CFE infrastructure.
Now, the Bank of Mexico Law gives the president the margin to appoint Victoria Rodríguez as a member of the Governing Board without meeting the requirements, but with the restriction that she could not be Governor until after having served for three years as deputy governor. This did not happen, he preferred to commit himself to an appointment that could become the factor that ends up defining the unfavorable performance of the Mexican economy throughout his tenure as president. It will be necessary to see how the markets will react to decisions that the imminent governor must communicate and how much they will trust that what she communicates is not influenced by the president’s obsessions.
@GerardoFloresR
Telecommunications expert
Economic Momentum
Reference-www.eleconomista.com.mx