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The challenges of stability

The presidential succession and the appointment of the new head of the Bank of Mexico are key decisions in the future of Mexico
Agustín Carstens – Photo: Germán Espinosa/EL UNIVERSAL
13/11/2017
08:58
Mexico City
Newspaper Leader by EL UNIVERSAL
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We can roughly divide the population of Mexico into two groups: those who grew up amidst constant economic crisis and those who have been witnesses of a modest economic development, without steep devaluations or annual inflation over 100%.

One of the reasons the Mexican economy has remained stable in the last few decades is because of the actions of the Bank of Mexico (Banxico).

Ever since this institution was granted its autonomy – in 1994 – the central bank stopped being just a money-printing factory and took on responsibilities established in the Constitution, such as maintaining the stability of the purchasing power of money and controlling inflation.

The current head of the Bank of Mexico will step down from his post the last day of this month. Despite the inflation rate currently being above 6% – way above the goal of maximum 3% (a situation many analysts mainly attribute to the increase in fuel prices at the beginning of the year) – the average inflation rate in seven years (January 2010 to October 2017) has been of 3.83%, less than the 4.54% we got during 2002-2009.

Although there are still many pending issues to resolve, such as recovering the purchasing power of wages and having national development reach greater levels, the stability of the so-called macroeconomics has been key in ending the crises we had at the end of every presidential term, mainly because the Bank of Mexico was used to finance the economic imbalances of the administrations.

This change didn't happen overnight. It has taken it 20 years to establish firm grounds in our economy. Therefore, given the electoral process in our country – which will culminate on July 1, 2018 – it's important that whoever wins the presidential elections makes a commitment not to compromise our hard-won stability.

If Mexico has an adequate economy, there is a leeway to assist the most pressing social matters of the country. If a country's economy is riddled with devaluations and high inflation, the number one priority will be returning to stability, surrounded by severe popular discontent.

The presidential succession and that of the head of the Bank of Mexico are key decisions in the future of Mexico. Economic stability can make the difference between achieving a greater development or condemning Mexico to a downward spiral, a setback on all our achievements.

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