Editing Bank of Mexico (section)

== Foundation ==

The current [[constitution of Mexico]] was signed in 1917. Article 28 of that constitution stipulated that all paper money would be issued by a single bank controlled by the government.<ref name=":1" /> But it was not until the end of 1924 that the ''Ley General de Instituciones de Crédito'' (General Law of Credit Institutions) was passed which was the legal antecedent for the Banco de México.<ref>{{Cite web|url=http://historiademexico2cobao.blogspot.com/2011/11/banco-de-credito-agricola.html|title=Agricultural credit bank|date=November 6, 2011|website=Historia de Mexico 2|access-date=May 26, 2019}}</ref> The law prevented banks from owning stock in other banks and eliminated the stock exemption for banks. Most importantly, the law called for the creation of a central bank.<ref name=":2" />

The Banco de México was created on August 25, 1925, under the direction of [[Finance minister|Minister of Finance]] [[Alberto J. Pani]] with an official ceremony given on September 1, 1925.<ref>{{cite journal |title=Ley creando el "Banco de México |journal=Diario Oficial |date=August 31, 1925 |volume=XXXI |issue=58 |pages=1263–1271 |url=http://www.dof.gob.mx/index.php?year=1925&month=8&day=31 |access-date=9 December 2020}}</ref> It was given exclusive authority to mint [[coin]]s and print [[banknote]]s, a sharp departure from policies of the past. The bank was also given responsibility over [[exchange rate]]s, [[interest rate]]s, and monetary regulation. Initially, retail banks even had the option not to partner with Banco de México. The main goals of the Bank at that time were to unify the fractured banking system left behind by the Revolution, create a flexible financial system that could modernize the country, reestablish credit, and renew trust in paper money.<ref name=":0" />

The bank's first years were difficult. Initially only two private banks affiliated themselves with Banco de México, and by 1927, in the midst of the [[Cristero War|Christero War]], the bank exceeded the legal limit of how much it could loan to the government. The unease of the private banking institution was assuaged somewhat when the initial offices of Banco de México were temporarily located in the headquarters of the ''Banco de Londres y Mexico''.<ref name=":2" /> The banking interests cemented their relationship with the government by issuing loans to government officials, ensuring that the politicians had a vested interest in the stability of the system.{{Citation needed|date=November 2019}}

In 1932, laws were passed that required all private banks to invest their capital in Mexico and associate themselves with Banco de México. The laws also required that Banco de México cease operating as a commercial bank. After passage of this legislation, only three foreign banks remained in the country. These changes and a looser restriction on the issuance of banknotes led to a growing trust in the central bank.<ref name=":0" /><ref name=":2" />