Economy

Mexican central banker turns up heat on contentious law

On Wednesday, Mexico's Senate passed the draft law that would make Banxico buy up foreign cash that commercial banks cannot return to its country of origin

Mexican central banker turns up heat on cash-buying law. Photo: REUTERS/Daniel Becerril/File Photo
  • Alejandro Diaz de Leon, Banxico’s Governor, called for the lower house of Congress to begin dialogue;
  • Mexican Senate approved the law on Wednesday;
  • Jonathan Heath said there were plenty of arguments against changing laws that govern the Bank of Mexico.

A second member of Mexico’s central bank appointed by President Andres Manuel Lopez Obrador on Saturday added his voice to criticism of a new law which the authority is resisting as a threat to its reputation and autonomy.

On Wednesday, Mexico’s Senate passed the draft law that would make the Bank of Mexico (Banxico) buy up foreign cash that commercial banks cannot return to its country of origin.

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Its advocates say it will help Mexicans with poor access to the financial system, such as migrant families and hospitality sector workers paid in dollars, to unload their cash.

Critics including Central Bank Governor Alejandro Diaz de Leon say it could force Banxico to absorb money from drug gangs and tarnish its name with international authorities.

Jonathan Heath, one of two current Banxico board members nominated by Lopez Obrador, said there were plenty of arguments against changing laws that govern the Bank of Mexico.

“One of the most important is that one should not reform a law to favor one single company, especially with a negative track record with the SEC (Securities and Exchange Commission) in the United States,” Heath wrote on Twitter.

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The other Banxico board member put in place by Lopez Obrador, Gerardo Esquivel, had already criticized the bill.

Heath did not name the company, but his comment was interpreted by analysts as a reference to the interests of Mexican billionaire Ricardo Salinas, whose banking arm Banco Azteca is an option used by many Mexicans to change dollars.

Heath later retweeted the latest cover of Mexican magazine Proceso emblazoned with a headline saying Lopez Obrador’s National Regeneration Movement (MORENA), which proposed the bill, had put Banxico at the service of Salinas.

MORENA lawmakers reject this.

Salinas, a combative businessman who has previously clashed with the SEC, this week defended the cash law in a blog. A spokesman for Salinas declined to comment.

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