At the beginning of the 1990s, Mexico underwent critical structural changes that responded to the previous decades’ recurrent crises. Despite the difficulties that arose in the middle of the decade, like the 1994–95 crisis, the government had made significant adjustments for deepening the social, political, and economic transformation begun the previous decade. Those reforms entailed creating economic and political institutions, strengthening judicial power, and economic reforms necessary for the long term. It is essential to consider that such changes occurred when the country was still facing high debt, inflation, and mistrust from the private sector.

In the international context, 1989 witnessed a year of political and economic events that were incredibly significant. The fall of the Berlin Wall marked a new economic reopening, the end of state interventionism, stable public finances, and the predominance of the market. At that moment, Mexico took significant measures: reopening of trade, privatization, and institution building. Simultaneously, the Washington Consensus appeared as a path that many countries were obligated to take. Mexico was a conspicuous example of a country on that path in the years that followed.

INSTITUTION BUILDING IN THE 1990S

One of the country’s leading institutions that suffered radical changes was the Bank of Mexico (Banxico). In 1994, the Bank of Mexico acquired its autonomy through a constitutional mandate when President Salinas was still in power. The objective of central bank autonomy is for the bank to take its own decisions apart from governmental interests as an antidote to expansionary monetary policies like those implemented in the 1970s. Considering the bank’s critics about its minimal interventions in the 1982 crisis, one might have expected that the Bank of Mexico would act independently in the upcoming 1994 crisis, but it was unable to control the balance of payments crisis which was very costly to the country’s economy (Chávez 2004).

Despite the difficulties with which the Bank of Mexico started its independent status, it progressively corrected its roles to become a hightier institution. Once the government diminished the intensity of the 1994–95 crisis, the Bank of Mexico managed to promote economic stability and the landscape changed gradually.