Victoria Rodríguez Ceja, nominated to be a member of the Banco de México Governing Board, affirmed that she will preserve the autonomy of the central bank and will seek to fulfill the sole objective of the institute, which is the stability of purchasing power.
In her first intervention before legislators of the Finance Commission of the Senate of the Republic, the still undersecretary of Expenditures, maintained that she has the experience and knowledge to join the Governing Board of Banco de México.
This after repeated direct questions from opposition senators, who asked him to answer if he met the requirements of the Law to be a member of the Board, such as having five years of experience in a high-level position in the Mexican financial system and enjoying recognized competition in monetary matters.
Rodríguez Ceja said that he will work “hand in hand with the members of the Governing Board, as well as with the professionals who make up the great institution that is Banco de México.
“We will have to act at all times with the necessary tools for the conduct of monetary policy that ensure price stability in our country and the healthy development of the financial system for the benefit of the entire population.”
Regarding the reserve assets of the Bank of Mexico, he stressed that “the issue is established in law, where it is established that the main objective of reserves is to contribute to financial stability.”
He pointed out that the reserves “are a financial cushion in emergency to reduce the impact of volatility and that the Law is very clear in saying that they can only be invested in first-order securities in foreign currency issued by countries other than Mexico.”
From capital outflows to cryptocurrencies
The President’s nominee, who replaces Arturo Herrera as a proposal to fill the vacancy that Alejandro Díaz de León will leave as governor as of January 1, explained at the request of the senators that it is not the responsibility of the central bank to prevent capital outflows.
“The mandate is to monitor the stability of the financial system in which the issue of capital outflows does affect, so the mandate is clear and forceful and does not directly include this issue.”
On his position regarding the handling of cryptocurrencies in the world, he first said that the new technology in favor of financial inclusion must be taken advantage of and is welcome. On a second occasion, he adjusted the response to warn that they cannot be classified as currencies, because they do not meet the minimum points to be recognized as legal tender and did not detail the characteristics that define fiat money.
He acknowledged that “the challenges ahead for monetary policy are extremely complex and require an in-depth analysis of both observable and unobservable variables,” but he did not specify them.
Limited technical defense
Experts warned that the position of Rodríguez Ceja’s speech was attached to the law and in line with what the market wanted to hear.
The vice president of investments in the fund manager, Franklin Templeton, Luis Gonzali, considered that “he was more focused on appeasing the fear created in the markets since the announcement of his nomination.”
Alonso Cervera, chief economist for Latin America at Credit Suisse, considered that he gave “a good speech” when addressing central issues such as the single mandate, autonomy and the level of human capital in Banxico. “But in the question and answer session he was less forceful and repeated technical concepts such as the need to anchor expectations, or the gradual convergence of inflation towards the target.”
While Raymundo Tenorio, a former official at Banxico, argued that Rodríguez Ceja “does not have a correct reading of monetary policy.
“He was inclined to explain the upward variation in inflation as a result of transitory episodes without recognizing the structural problems of a technical nature that the economy has. He did not speak of the slack in the product gap and did not give forceful or argumentative answers about the rates ”.
In the evening, it was reported that the Finance Commission will vote today at 10:00 in the morning on the opinion approving the Executive’s proposal for Rodríguez Ceja to form part of the Banxico Governing Board, to later be appointed by the chief executive governor of the central bank.