When president Ernesto Zedillo appointed his finance secretary, Guillermo Ortiz, to head the central bank for the next six years, tongues wagged. In Mexico, political pundits speculated endlessly about the reasons Zedillo would overlook the most obvious choice for the position, the eminently qualified central bank vice governor Francisco Gill Diaz, and sacrifice the most vital member of his cabinet.
Ortiz, after all, is considered the architect of Mexico's successful economic recovery. These observers felt this blatantly political move did not serve the Banco de Mexico's new-found reputation as an autonomous institution. The central bank's credibility suffered a terrible blow with the messy devaluation of the peso in December 1994. After the Ortiz nomination late last year, ominous rumours flew about a second December mistake.
Many in the financial markets, on the other hand, understood the choice perfectly. "I thought it was a great choice," says Eduardo Cepeda, head of JP Morgan's Mexico office. "Ortiz is a very independent person and an orthodox economist." Moreover, Cepeda adds, Ortiz's appointment "shifted more economic power to the central bank. He carries a lot of weight within the country".
Zedillo added more weight when he gave the central bank the last word on foreign-exchange policy.