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Historical outline

 


Background

Banco de México, which was created on September 1, 1925, was the pinnacle of a long-awaited aspiration by Mexicans. Its creation ended a long period of monetary instability and anarchy, dating back to the beginning of the XIX century, and during which a system of diverse issuing banks operated. Such system greatly deteriorated with the upsurge of the Mexican Revolution in 1910, which brought up distrust on banknotes and the downfall of the monetary system prevailing at that time.

Few will remember that the origins of the Mexican central bank date back to at least the beginning of the XIX century. As long ago as 1822, during the reign of Agustín de Iturbide, a project to create an institution that would be known as "Gran Banco del Imperio Mexicano" (the Great Bank of the Mexican Empire) with the power to issue banknotes was put forward.

At that time, in Europe, central banks began growing out of a natural progression in which retail banks gradually assumed functions that nowadays correspond solely to central banks. A similar process would have gone underway in Mexico around 1844, but, in the end, the idea embracing free competition between retail banks in the area of banknote issuance won acceptance and materialized.

With the demise of the Porfirian banking system during the Revolution, the issue was no longer whether there should be a monopoly or free competition in currency issuance, but rather the features of the Single Bank of Issue provided for in article 28 of the Constitution passed in 1917. The dilemma was whether to create a private bank or a government-controlled bank. Meeting in Querétaro, the founding members opted for the latter, although the Constitution