Beautifully engraved certificate from the Banco Central Mexicano
in 1908. This historic document has an
ornate border around it with with images of a lake, woman, eagle and much more. This item is hand signed and is
over 111 years old.
Banco Central Mexicano, a private bank, acted as the
Mexico City correspondent for state banks. State banks were
prohibited from establishing branches outside states or regions
under Mexican bank law. In contrast, the two so-called city
banks (which were headquartered in Mexico City) faced no
branching restrictions. The Banco Central System, a bank note par
redemption and clearing system for other payments operated
in Mexico from 1899 until its collapse in 1913.
The Banco Central System was devised to be a mechanism
through which state banks could extract rent from the two large
city banks. It
has been alleged that fraud and mismanagement by state banks were
responsible for the problems the Mexican banking system
experienced after 1907. For par redemption to have been viable,
the Banco Central System had to have imposed some constraints on
bank behavior. Although Banco Central was less
well-positioned to address incentive problems relative to one of
its successful counterparts in the United States (the Suffolk
Bank of New England), it acted like a private bank.
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