Introduction to the 1917 Constitutional Convention
In late 1916, the Constitutional Convention in Querétaro debated the final text of Article 28 of Mexico’s Magna Carta. Initially, the draft only listed acuñación de moneda metálica (minting of metallic currency), postal services, telegraphy, and radiotelegraphy as exclusive state functions. It was thanks to an addition proposal by prominent constituyente Rafael Nieto that “the emission of banknotes through a Single Emission Bank” was included.
Legislators’ Concerns about Emission Banks’ Autonomy
Although there’s no explicit mention of autonomous central banks in the Querétaro Constitutional Convention, some legislators showed foresight regarding the risks of granting excessive emission capabilities to such institutions. Constituyente González highlighted the potential conflict of interest, while diputado Espinosa warned about the political nature of a State-controlled Single Emission Bank rather than a financially-focused one.
Global Emission Banks and Their Autonomy
The discussions around Article 28 specifically referenced a dozen emission banks worldwide. Among them, the Bank of England was prominent due to its global recognition. Special attention was given to the credit limit imposed on the English bank regarding government loans.
Surprisingly, the Querétaro Convention did not address the U.S. model established in 1913 with the Federal Reserve System. However, it’s worth noting that the Bank of England was founded with significant autonomy.
Post-World War I Trends in Emission Banks
Following World War I, a global trend emerged in which emission banks set credit limits for their respective governments. The Spanish Bank of Issue serves as an example, and this reference was chosen for the Banco de México when it opened in 1925—exactly a century ago.
Key Questions and Answers
- What was being discussed in the 1917 Constitutional Convention? The delegates debated Article 28, which outlined exclusive state functions. Rafael Nieto proposed adding the emission of banknotes through a Single Emission Bank.
- Why were legislators concerned about emission banks’ autonomy? They foresaw potential conflicts of interest and the risk of politicizing financial institutions rather than maintaining their focus on finance.
- Which global emission banks were referenced during the discussions? A dozen banks worldwide were mentioned, with special attention to the Bank of England and its credit limitations for government loans.
- What trend emerged in emission banks after World War I? There was a global shift towards setting credit limits for governments, with the Spanish Bank of Issue serving as an example and influencing the establishment of Banco de México in 1925.
