Banco de Mexico
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The Banco de Mexico (Spanish: Banco de México), abbreviated BdeM or Banxico, was Mexico's central bank and lender of last resort. The Banco de Mexico was autonomous in exercising its functions, and its main objective was to achieve stability in the purchasing power of the national currency. The Banco de Mexico was an internally autonomous public institution whose governor is appointed by the President and approved by the Congress of the Union to which it is fully responsible. Banco de Mexico was the entity responsible for the monetary policy of a country or of a group of member states. It was a bank that can lend money to other banks in times of need.
Banco de Mexico's primary responsibility was to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system). It also had supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently..
Functions
- implementing monetary policy
- controlling the nation's entire money supply
- the Government's banker and the bankers' bank ("lender of last resort")
- managing the country's foreign exchange and gold reserves and the Government's stock register
- regulating and supervising the banking industry
- setting the official interest rate – used to manage both inflation and the country's exchange rate – and ensuring that this rate takes effect via a variety of policy mechanisms
The Exchange requirements it will allow to influence the money supply, the Banco de Mexico required that some or all foreign exchange receipts (generally from exports) be exchanged for the local currency. The rate that was used to purchase local currency may be market-based or arbitrarily set by the Banco de Mexico. This tool is generally used with non-convertible currencies or partially-convertible currencies. The recipient of the local currency may be allowed to freely dispose of the funds, required to hold the funds with the Banco de Mexico for some period of time, or allowed to use the funds subject to certain restrictions. In other cases, the ability to hold or use the foreign exchange may be otherwise limited.
