President Claudia Sheinbaum Suggests Expanding Banxico’s Mission
Mexico’s President Claudia Sheinbaum proposed on Tuesday that it might be worthwhile to discuss whether Mexico’s central bank, Banxico, should broaden its focus towards economic development while maintaining its autonomy.
Challenging Neoliberal Axioms
During her morning press conference, Sheinbaum commented that evidence has dismantled “neoliberal axioms,” suggesting a shift in perspective for Banxico.
Dual Mandate: A Closer Look
Sheinbaum referenced the Federal Reserve’s dual mandate for managing both growth and price stability, proposing a similar discussion for Banxico.
Expert Opinions on Dual Mandate
To explore this topic further, El Economista consulted three experts on monetary policy.
Alfredo Coutiño’s Perspective
According to Alfredo Coutiño, author of the study “Monetary policy with dual mandate. An optimization problem,” published in the Journal of Policy Modeling, a successful dual mandate requires constitutional commitment from fiscal policy towards growth and price stability.
Coutiño emphasized that a dual mandate does not undermine monetary independence if managed to strictly uphold its primary goal of promoting social well-being through price stability.
Steps for Effective Dual Mandate
Coutiño’s research suggests several steps to ensure the long-term effectiveness and independence of a dual mandate, including implementing a constitutional fiscal rule to ensure long-term government commitment.
Job Creation: Not a Decreto’s Responsibility
Raymundo Tenorio, dean of the Technological Institute of Superior Studies of Mexico (ITESM), cautioned that the real economy, not decrees, generates employment.
Tenorio, a former Banco de México official and monetary policy expert, explained that even with a modified constitutional mandate for Banxico, the central bank lacks tools to directly create jobs.
He stressed that job creation is the responsibility of the Secretariat of Finance, not Banxico.
Formalizing Current Operations
Luis Pérez Lezama, Director of Economic Research at ThinkLab Veracruzano Saver, suggested that formalizing Banxico’s current operations within the Junta de Gobierno could enhance its capabilities.
Pérez Lezama pointed out that many Banxico members are already aligned with fiscal policies, focusing on debt impact and consumption-driven growth monitoring.
He noted that critical issues, such as updating inflation measurement and implementing a true macroprudential monetary policy, remain unaddressed.
The Path Forward
Experts propose formalizing Banxico’s role, possibly through legislative changes, to ensure autonomy in fiscal matters like consumption, interest rates, public spending, and private investment measurement.
Key Questions and Answers
- What is the main topic of discussion? President Sheinbaum suggests Banxico should expand its mission to include economic development while preserving autonomy.
- Who are the experts consulted? Alfredo Coutiño, Raymundo Tenorio, and Luis Pérez Lezama.
- What are Coutiño’s recommendations? Implement a constitutional fiscal rule for long-term government commitment to support the dual mandate.
- What does Tenorio say about job creation? It’s the responsibility of the Secretariat of Finance, not Banxico.
- What suggestions does Pérez Lezama have for Banxico? Formalize current operations and address critical issues like inflation measurement and macroprudential monetary policy.
