Seeking Central Banker to Tame Flailing Peso; Mexico-Born a Must

  • Alejandro Diaz de Leon has best chance at top spot: survey
  • Werner seen as most experienced; Minister Meade also contender

It’s now 11 weeks into the hunt for a new central bank chief, and there’s still no word from Mexico on who will replace its star policy maker Agustin Carstens. No wonder every conference or dinner party of economists turns into a guessing game about who will take Carstens’s spot when he resigns. The long wait -- Carstens leaves in July to head the Bank of International Settlements-- has only fed the rumor mill as columnists constantly add new names to the roster of candidates. The information gap has grown so vast that one columnist now writes Carstens won’t even step down as planned, and will stick around until December.

The job comes with a robust list of requirements: for starters, the next central banker needs to be born in Mexico and be 65 years old or younger. The candidate must rein in surging inflation, shore up a currency pummeled by President Donald J. Trump and keep a stumbling economy afloat, while preventing a potential, and devastating credit downgrade. We spoke with 20 Mexico and U.S.-based analysts in banks and research firms including Barclays Plc and Citigroup Inc., who told us who their ideal candidate would be, as well as who they believe would actually end up getting the post:

Alejandro Diaz de Leon

Alejandro Diaz de Leon, a long-time Mexican government official who just joined the five-member Banxico board this year, and who economists consider to be dovish, is by far the contender seen as best positioned for the job.

Alejandro Diaz de Leon

Photographer: Susana Gonzalez/Bloomberg

His ten years in government began in 2007, when he launched and headed Mexico’s pension fund for public employees. He then led debt issuances at the Finance Ministry, winning recognition for opening Mexico’s bond sales to new markets. The graduate from Yale University with a masters in public administration became chief of Mexico’s export-import bank in 2015 before taking his post as deputy Banxico governor in January when Manuel Sanchez’s term expired. That marked Diaz de Leon’s return to the central bank, where he had worked for 16 years before his sojourn into government.

If nominated and ratified by the Senate, Diaz de Leon would offer significant market experience to the board, and would be one of its most dovish members, Barclays chief Mexico economist Marco Oviedo said. "But his challenge to bring inflation back to 3 percent by 2018 means his dovishness would be limited," Oviedo said.

Manuel Ramos Francia

Manuel Ramos Francia

Photographer: Susana Gonzalez/Bloomberg

Floated as both an ideal and likely candidate, Manuel Ramos Francia has served as a deputy Governor of Banxico since 2011 and previously headed economic research for almost a decade. Like Carstens, he attended college at Mexico City-based ITAM, and went on to receive his doctorate in economics from Yale. He later joined the finance ministry as deputy minister for revenue. Ramos Francia has been the most visible member of the bank’s board besides Carstens, giving radio interviews to explain Mexico’s currency intervention and participating in international forums.

Jose Antonio Meade

Another name mentioned among likely candidates is Jose Antonio Meade, an orthodox technocrat who has been a high-profile fixture in Mexico’s federal government across two presidential administrations. Chosen by President Felipe Calderon as energy minister in 2011, he became finance minister later that year and was the only cabinet member who stayed on under President Enrique Pena Nieto, of a different party than Calderon, to become foreign minister.

Jose Antonio Meade

Photographer: Susana Gonzalez/Bloomberg

Meade returned to lead the finance ministry in September when Luis Videgaray, one of Pena Nieto’s closest advisers, briefly left the government amid the fallout from Donald Trump’s controversial visit. While he was seen as a possible presidential candidate for Pena Nieto’s party in next year’s election, that speculation quieted amid the government’s wildly unpopular decision to increase gasoline prices as the start of this year. The Yale University doctorate is seen as a safe choice for the central bank and someone who’s shown an ability to work with pretty much everyone. Finance minister was an immediate stepping stone to the central bank helm for both Carstens and his predecessor, Guillermo Ortiz.

Ernesto Zedillo

Ernesto Zedillo

Photographer: Andrew Burton/Getty Images

Perhaps the most intriguing name mentioned is that of former President Ernesto Zedillo. A member of Pena Nieto’s Institutional Revolutionary Party, Zedillo served as president from 1994 to 2000, seeing Mexico through the Tequila Crisis that took place just after he was sworn in and helping open the political system to competition and the first non PRI-president in seven decades. Zedillo, who holds a doctorate in economics from Yale University, where he now works, worked at the central bank before becoming president. And at 65 years old and not celebrating his next birthday until December, he gets in just under the wire for the age cutoff for Banxico’s five-member board.

Alejandro Werner

Alejandro Werner

Photographer: Christopher Goodney/Bloomberg

Alejandro Werner, the International Monetary Fund’s Western Hemisphere director, would be the ideal replacement for Carstens, according to the survey, however none of the economists polled thinks he’ll be chosen. The reason is simple: Banxico bylaws limit board members to citizens born in Mexico, but Werner is a nationalized Mexican born in Argentina. Changing the law is highly unlikely, according to analysts and a person with knowledge of the decision making process; that could open a congressional debate so broad that lawmakers might try to add employment as a second mandate alongside price stability or erode the bank’s autonomy. Werner said in a Jan. 24 Bloomberg TV interview that any economist would be honored to be chosen, although he’s happy where he is.

Werner served as Deputy Finance Minister from 2006 to 2010, where he oversaw some of the government’s most successful oil hedge trades. From 2011 until 2012 he headed corporate and investment banking at BBVA-Bancomer, before joining the IMF. The holder of a Ph.D. from the Massachusetts Institute of Technology worked at Banco de Mexico as director of economic studies, and in 2007 he was named Young Global Leader by the World Economic Forum.

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