Banxico’s Governing Board can operate with four members

The representative of the Executive is letting the clock run without informing his decision to ratify Gerardo Esquivel as deputy governor of the Bank of Mexico (Banxico) or notify his relief. The position of the deputy governor expires by law on December 31, after the four years of the responsibility that his predecessor, Roberto del Cueto, left unfinished after resigning in 2018.

In the event that the term expires and there is no nomination of the representative of the Executive, the Banxico Law provides in its Article 45 that both the governor and two deputy governors can convene a meeting of the Governing Board and that said sessions must be held with the attendance of at least three of its members. This has already operated in 2007 and 2017.

In 2017, which is the most recent experience of a Governing Board operating with four of its members, Alejandro Díaz de León took office as Governor on December 1 and his integration into the new responsibility left the position he held as deputy governor vacant.

The Board operated without one of the deputy governors and even made the decision to start the rate hike cycle in December 2017, with the vote of only four members; at that time the rate went from 7 to 7.25 points, in full gasoline.

For the first monetary decision of 2018, the decision of the complete Governing Board was already available, with the first woman to be a member of the collegiate body, Deputy Governor Irene Espinosa.

Before that episode, from December 2006 to June 2007, the Senate rejected the nomination of the former Undersecretary of the Treasury, Carlos Hurtado, to become Deputy Governor of Banxico. A proposal made by the representative of the Executive, Felipe Calderón.

Yes you have it in mind

President Andrés Manuel López Obrador explained on November 30 in his morning conference that he had not yet decided “the Bank of Mexico.”

“The Secretary of the Treasury is seeing that (…) there is still time for it to be defined, since the position ends on December 31.”

On December 20, also in his conference, the president explained that the Ministry of Finance already had a proposal. “The term of Gerardo Esquivel ends until the end of the month, on the 31st. So it has not yet been resolved but it will be resolved these days.”

had a learning curve

In an interview published in a podcast, Gerardo Esquivel admitted that he already went through a learning curve during his time on the Governing Board, which would give him a certain advantage of remaining in responsibility, as long as the president decides to ratify him. He maintained that it is the prerogative of the president to nominate it and the senate to ratify it.

As he did during his participation in the press conference where the Quarterly Report was presented, he confirmed that he would like to stay in office for a second term.

Financial sector analysts ruled out that the market is concerned about the next replacement of Gerardo Esquivel on the Board of Governors of Banco de México.

From the perspective of Luis Gonzali, vice president of investments at the fund manager Franklin Templeton, since Esquivel has been the dissident of the Board, his absence will not mark a significant change in the direction of the decisions.

Pamela Díaz Loubet, economist for Mexico at BNP Paribas, considers that despite being the consistent dissident in the decisions of the Board, the deputy governor is an official who has had his positions well argued and has been able to defend them.

ymorales@eleconomista.com.mx