Agustín Carstens

• 1. Introduction

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  Agustín Carstens was born on the 9th of June 1958 in Mexico City. In 2011, Bloomberg Markets Magazine placed him among the fifty most influential people in global finance. That same year, he and Christine Lagarde were the two final candidates to lead the International Monetary Fund. He did not win the race. But the contest was revealing. A candidate shaped by decades inside Mexico's financial institutions had come within reach of leading the fund. His path began as a bank intern and ran through Mexico's worst financial crises. It then carried him through a cabinet post and multiple institutional appointments on two continents. What made each step possible, and what did he do when he reached the highest levels of economic governance?

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• 2. The Chicago Doctorate

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  Michael Mussa, who later served as director of research at the IMF from 1991 to 2001, was Carstens's doctoral thesis advisor at the University of Chicago. Carstens had first studied economics at the Mexico Autonomous Institute of Technology, known as ITAM, where he earned a bachelor's degree. A scholarship then took him to Chicago, where he completed a master's degree in 1983 and a doctorate in economics in 1985. His wife, Catherine Mansell, is an American academic, writer, and economist. She has authored books on finance and on literary fiction and nonfiction; she publishes the latter under the pen name C. M. Mayo. In the mid-1980s, Carstens returned to Mexico and rejoined the Bank of Mexico. Before he turned thirty, he was appointed treasurer, taking effective charge of the country's national reserves.

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• 3. The Avoidable Crisis

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  Miguel Mancera, then chairman of the Bank of Mexico, brought Carstens onto his team as chief of staff in the early 1990s. By the end of that decade, Carstens had risen to Director General of Economic Research. In that role, he worked alongside Governor Guillermo Ortiz Martínez to shape the Bank's economic policy. The policy work came in the aftermath of the Tequila Crisis and the Russian default crisis, and Carstens co-authored an analysis of Mexico's financial collapse with then Deputy Governor Francisco Gil Díaz. Their central finding was pointed. The crisis was, to a large extent, an avoidable run on the Mexican peso, brought on by external circumstances and political problems. His appointment to the IMF as deputy managing director began on the 1st of August 2003.

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• 4. The Finance Secretary's Gamble

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  Felipe Calderón, Mexico's president-elect in 2006, recruited Carstens to coordinate his economic transition program once the election was validated, drawing him away from the IMF on the 16th of October 2006. Calderón then appointed him secretary of finance. On the 26th of March 2007, Carstens also became the new chairman of the joint World Bank and IMF Development Committee. That post is customarily held by a finance minister from a developing country. As secretary, he made an unconventional decision: he hedged Mexico's oil earnings for 2009 against a possible price fall. The move generated an $8 billion profit for the country. When popular protests against rising food prices spread in 2007, Carstens offered an unusual interpretation. He regarded high food prices not as a crisis to suppress but as a positive driver of investment in agriculture. On the 9th of December 2009, President Calderón nominated him to become governor of the Bank of Mexico.

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• 5. Governing Mexico's Money

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  The Mexican Senate confirmed the appointment on the 15th of December 2009, with 81 votes in favor and 19 against. Carstens was succeeding Guillermo Ortiz, a twelve-year veteran who had managed to reduce inflation from double digits to 4 percent by the end of 2009. He took office on the 1st of January 2010 and served as governor until the 30th of November 2017. Shortly before his term concluded, he had been appointed general manager of the Bank for International Settlements.

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• 6. Basel and the BIS

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  Carstens arrived in Basel, Switzerland, on the 1st of December 2017 to begin that role. His initial appointment was for a five-year term. He served until the 30th of June 2025. He had by then distilled his experience into five named characteristics and a set of structural remedies. It was a framework he had built throughout his career.

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• 7. Five Characteristics

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  Business cycles in emerging economies are, in Carstens's analysis, tightly bound to those of industrialized nations. They are also more volatile. That volatility can be amplified by price fluctuations that industrialized economies do not typically encounter. Rapid capital outflows, made possible by corporate globalization, represent an additional source of risk. Exchange-rate regimes create yet another vulnerability that industrialized nations rarely face. For each of these pressures, Carstens proposed a corresponding solution. He called for more open trade and investment regimes and for interest rates to be governed by markets rather than by governments. He argued that banks in emerging economies should be robust enough to withstand severe macroeconomic shocks. Among his structural prescriptions were central bank autonomy, the privatization of state production, reduced labor market regulation, and lower dependence on foreign savings. That last prescription addressed the same capital vulnerability that his analysis with Francisco Gil Díaz had identified as a driver of Mexico's peso crisis. He now serves as an international advisory board member of the Global Finance and Technology Network.

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