MEXICO CITY -- Bank of Mexico Governor Agustin Carstens vaulted to worldwide fame over the summer with his run for director-general of the International Monetary Fund. He called on the fund to break with the tradition of selecting a European--and instead select a candidate from an emerging economy.
Carstens ultimately was unsuccessful, but he expresses no regrets.
"I think it was a successful process ... it was positive that pretty much everywhere a Mexican was considered a creditable candidate for that position," Carstens tells Latin Trade during an interview from his fifth floor of the Bank of Mexico once in the Mexico City's Centro Historico."We won by losing."
That a Mexican financial official would be considered for the top IMF job shows just how far Mexico has come since the peso crises and economic calamities of past decades.
And Carstens' candidacy won positive exposure for a country beset by drug-war violence in certain regions, but one that has emerged as an unlikely standard bearer of macroeconomic prudence. GDP growth in Mexico should measure 4.5 percent in 2011, the financial system is solid, the peso is stable, and exports are booming.
Carstens' candidacy also won exposure for an agenda of change in the IMF, which he considered necessary given the changing state of world economic affairs. Emerging economies have performed strongly, while those of the United States and Europe have sunk into debt and dysfunction. Electing a European, Carstens says, made little sense.
"In a situation where Europe is in crisis ... where Europe has lost a tremendous amount of weight in the world economy... Europe is overrepresented in the fund," Carstens says. "My perception is that it... undermines the legitimacy of the fund."
Carstens knows of what he speaks. An avid baseball fan with a Ph.D. in economics from the University of Chicago, he was a deputy managing director at the IMF before returning to Mexico as finance secretary in late 2006 and moving to the central bank three years later.
He started his career at Mexico's central bank and learned the pain of a financial crisis and downgrade through experience: Mexico was considered so risky in the mid-1990s that it could issue only seven-day bonds.
Carstens saw a crisis stirring again after returning to Mexico--and this time he got ready. Mexico approved a fiscal reform in 2007, made sure its banking system was sound and "took advantage" of low interest rates to refinance...