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A Century of Evolution of the Mexican Central Bank: The Road Towards Its Constitutional Autonomy

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The Indian Yearbook of Comparative Law 2018

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Abstract

Any central bank’s essential functions are the issuance and circulation of currency, as well as preservation of its relative value. This peculiar design of such institutions needs of wide autonomy to restrict to the maximum the credit of the central institution to the government and the compromise to offer the exact annual amount of currency. The story of the Bank of Mexico shows that the autonomy of the institution has been a clear purpose in its three stages of evolution worked out in different ways. Finally, in its present condition of constitutional autonomous organism challenges us to analyse the profile of the Bank of Mexico and the measure of the institution autonomy, we face the task using the method issued by Alex Cukierman.

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Notes

  1. 1.

    McEachern 1998.

  2. 2.

    The Gresham Law is quoted by McEachern, Op. cit., p. 191.

  3. 3.

    McEachern, Op. cit., p. 197.

  4. 4.

    Idem, p. 192.

  5. 5.

    Idem, p. 190.

  6. 6.

    McCandless 1993.

  7. 7.

    Marx 1972.

  8. 8.

    McEachern, Op. cit., p. 190.

  9. 9.

    McCandless, Op. cit., p. 188.

  10. 10.

    McEachern, Op. cit., p. 191.

  11. 11.

    Ortiz Mena 1960.

  12. 12.

    Quijano 1981.

  13. 13.

    Ortiz Mena, Op. cit., p. 387.

  14. 14.

    McCandless, Op. cit., p. 189.

  15. 15.

    McEachern, Op. cit., p. 193.

  16. 16.

    McCandless, Op. cit., p. 190.

  17. 17.

    McEachern, Op. cit., p. 193.

  18. 18.

    McCandless, Op. cit., p. 189.

  19. 19.

    McEachern, Op. cit., p. 193.

  20. 20.

    www.fuenterrebollo.com 16 de julio de 2002.

  21. 21.

    Casasús 1991.

  22. 22.

    McEachern, Op. cit., p. 197.

  23. 23.

    Idem, p. 197.

  24. 24.

    Vázquez Pando 1998.

  25. 25.

    Ortiz Mena, Op. cit., p. 396.

  26. 26.

    Zevada 1977.

  27. 27.

    Diario Oficial de la Federación. 27 de abril de 1935.

  28. 28.

    Mann 1986.

  29. 29.

    Karl Marx, Op. cit., p. 85.

  30. 30.

    Quoted by Mann, Op. cit., p. 34.

  31. 31.

    Lewis 1965.

  32. 32.

    Quoted by Quijano, Op. cit., p. 324.

  33. 33.

    Weatherford, Jack, Op. cit., p. 85.

  34. 34.

    Cottarelli 1993.

  35. 35.

    https://www.youtube.com/watch?v=iRzr1QU6K1o.

  36. 36.

    https://www.youtube.com/watch?v=7_Xw5tWsOQo, last visited August 29, 2018.

  37. 37.

    Córdova 1975.

  38. 38.

    Zevada, Op. cit., p. 92.

  39. 39.

    Chapa 1982.

  40. 40.

    Vázquez Pando, Op. cit., p. 712 y en Zevada 1977, pp. 92 and 93.

  41. 41.

    Zevada, Op. cit., pp. 92 and 93.

  42. 42.

    Ortiz Mena, Op. cit., p. 396.

  43. 43.

    Blinder 2000.

  44. 44.

    Hoffmeyer 1994.

  45. 45.

    Blinder, Op. cit., pp. 16 and 17.

  46. 46.

    Blinder, Op. cit., p. 9.

  47. 47.

    George Soule. INTRODUCCION A LA ECONOMIA CONTEMPORANEA. Fondo de Cultura Económica. Breviarios. 3a. Edición. Mexico. p. 91.

  48. 48.

    The Federal Reserve System. Purposes & Functions. 8a. Edición. 1994. p. 3.

  49. 49.

    Leaman 2001.

  50. 50.

    Churchill 1966.

  51. 51.

    Quoted by Romero 1991.

  52. 52.

    Quoted by Romero, Op. cit., p. 227.

  53. 53.

    Benetti 1990.

  54. 54.

    Diario Oficial de la Federación. 20 de agosto de 1993.

  55. 55.

    Diario Oficial de la Federación. 20 de agosto de 1993.

  56. 56.

    Cukierman 1998. Particularmente el capítulo 19 denominado The Measurement of Central Bank Independence. pp. 369–414.

  57. 57.

    Ibid., p. 371. The author points out that sometimes the practical implementation of the law can be more important than the text of the same or its rationale. Notwithstanding, we are performing this exercise based only on that which is foreseen in the text of the legislation.

  58. 58.

    Ibid., p. 372.

  59. 59.

    Article 2 of the Bank of Mexico Law states that the Bank’s purposes will be to provide currency, promote the healthy development of the financial system and propitiate the proper functioning of the payment systems, and to seek the stability of the purchasing power of said currency. Nonetheless, it would seem preferable to use the term “object” instead of “purposes”, as the former noun refers to the matter, subject or issue to which end corporations are established, and the latter noun (purposes) explains the end goal of the institution, its existence and causes. Also, the word “objective” can be used as an adjective and not as a noun. That is why I would rather use object in place of purpose or objective.

  60. 60.

    In the work we have been quoting, Alex Cukierman sets forth another evaluative method in addition to the one we have used. Said additional method is based on a questionnaire that includes the items mentioned in the paragraph. Ibid., pp. 387 and 388.

  61. 61.

    Paragraph 7 of article 28 of the General Constitution, appoints the central bank as the authority regarding currency exchange, inclusive with the intervention that corresponds to the competent authorities. The preceding situation is unacceptable, even if it stems from the fundamental law itself.

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Authors and Affiliations

  1. Universidad Anáhuac Querétaro, Mexico City, Mexico

    Jorge Vargas Morgado

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  1. Jorge Vargas Morgado
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  1. Centre for Comparative Law, National Law University, Delhi, New Delhi, India

    Mahendra Pal Singh

  2. Centre for Comparative Law, National Law University, Delhi, New Delhi, India

    Niraj Kumar

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Vargas Morgado, J. (2019). A Century of Evolution of the Mexican Central Bank: The Road Towards Its Constitutional Autonomy. In: Singh, M., Kumar, N. (eds) The Indian Yearbook of Comparative Law 2018. The Indian Yearbook of Comparative Law. Springer, Singapore. https://doi.org/10.1007/978-981-13-7052-6_14

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