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Thank You, Carstens!
Mexico’s central banker helped stabilize economy amidst Hurricane Trump.
LATINVEX EDITORIAL
Agustin Carstens has now set up residence in Basel, Switzerland – as the new head of the Bank for International Settlements (BIS) – after a distinguished career in Mexico.
It is a fitting move for one of the world’s most well-respected central bankers. BIS is often referred to as a central bank for the world’s central banks and Carstens is the first General Manager of BIS that comes from an emerging market.
In 2011, he was one of the two final candidates to take the helm of the International Monetary Fund (IMF), but unfortunately lost to Christine Lagarde from France. (The fund has only had Europeans as Managing Directors since it was created in 1946). Carstens would have been able to bring a truly international perspective to the IMF.
"He's a brilliant economist that mixes very well the theoretical or conceptual framework and the practical aspect of macroeconomics," Claudio Loser, a former head of the Western Hemisphere department at the IMF, told the Latin Business Chronicle in 2007.
MEXICAN STABILITY
Carstens had served as Mexico’s Central Bank governor the past seven years – including during this past year, which was dominated by uncertainty around Mexico’s economy due to the anti-Mexican and protectionist policies of the new US President Donald Trump.
That followed three years as finance minister during the administration of then-President Felipe Calderon.
A year ago, he surprised many when he announced he would be stepping down from the central bank – a post that he normally would have had through 2021.
In an interview with Reuters, he said he was cutting short the tenure because opportunities such as the one at BIS only come up occasionally.
After Trump won the November 2016 presidential elections, Mexico’s peso started to fall – a trend that would be repeated several times throughout 2017 as bad news came out of Washington on issues key to Mexican interests, including membership in the North American Free Trade Agreement (NAFTA).
Carstens' steady hand at the central bank played a key role in ensuing that the macro economy was stable despite the serious and unexpected political uncertainty caused by Trump’s initial electoral victory and then official policies from The White House.
“Today Mexico is well positioned to confront international challenges and a large reason for the macro economic stability is due to the well managed Central Bank monetary policies under the leadership of Dr. Agustin Carstens,” Jaime Gonzalez Aguade, president of Mexico’s National Banking and Securities Commission (CNBV), told Mexican newspaper Milenio.
While Mexican President Enrique Peña Nieto has named Alejandro Diaz de Leon -- a well-respected economist -- to succeed Carstens at the central bank, Carstens’ exit clearly is a blow to Mexico during the uncertainty with Trump. In fact, Carstens delayed his exit by five months at the request of Peña Nieto.
Meanwhile, the move to Basel represents yet another well-deserved milestone for Carstens.
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