The History of Guatemala’s Central Bank: El Banco de Guatemala
Did you know that a man named Orellana single-handedly restructured Guatemala’s economy by creating the Banco de Guatemala (the central bank of Guatemala)?
He also created the Quetzal—Guatemala’s currency—and fought multiple people who were benefiting from a defeated financial system.
What is a central bank? It is an entity that possesses the monopoly on the production and distribution of currency of a nation or a bloc of countries. Central banks regulate the money in the economy through financial instruments and monetary policies.
Want to learn about how—with the help of a Princeton University professor—a new financial era was born in Guatemala?
Read ahead to find out about the organizational structure, history, responsibilities, purpose, and even the iconic architecture of the Central Bank of Guatemala, the crown of a heroic endeavor born in the 1920s.
¡Aprendamos del Banco Central de Guatemala!
Let’s learn about the Central Bank of Guatemala!
Table of Contents
- History of the Central Bank of Guatemala
- Purpose of the Central Bank of Guatemala
- Organizational Structure of the Central Bank of Guatemala
- Architecture of the Central Bank of Guatemala
- Learn the Language of Guatemala
History of the Central Bank of Guatemala
The central bank of Guatemala was founded in 1926, thanks to the financial and monetary reform of 1924-1926 under the mandate of General José María Orellana and with the essential help of the Minister of Finance Carlos O. Zachrisson. Its first President was Manuel Noriega Morales (1946-1954).
This reform was a much-needed one since Guatemala was deeply in debt due to the financial imbalances that the regime of Manuel Estrada Cabrera inherited. Orellana—with the help of Professor Edwin Walter Kemmerer of Princeton University—had the mission of calling for a reform, enacting decrees that stopped the past consequences and balancing the monetary situation.
He also created a monetary unit—the Quetzal—and established a small organism that would stabilize the exchange rates, which later became the Central Bank of Guatemala as a fiscal agent of the government.
Changes like these were difficult to achieve due to the counterpointed political interests, fights with the press and Congress, and the pessimistic environment in Guatemala. These actions were also threatened by historical events such as the overthrowing of Manuel Herrera and Manuel Estrada.
Recommended reading: The Ultimate Vocabulary Guide: At the Bank in Spanish
Purpose of the Central Bank of Guatemala
The main characteristics and responsibilities of the Central Bank of Guatemala include:
- Autonomous political power to loan money to the government, other banks, and private corporations.
- Compliance with state-set goals such as maintaining inflation of 1% to 3% for a healthy national economy.
- Administration of monetary reserves and ensuring the proper functioning of the payment system and liquidity of the bank system.
- Guarding the national currency reserve inside their vaults with the purpose of stabilizing the exchange rate.
- Printing money within the national territory.
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The national currency of Guatemala is the Quetzal, and its current exchange rate is 7.69 Quetzales for each US dollar.
The Central Bank of Guatemala holds monetary international net reserves of 20,939.6 million Quetzales as of 2021. This reserve consists of gold, currency, titles, rights, contributions of international financial institutions, and other assets.
Organizational Structure of the Central Bank of Guatemala
The current president of the Central Bank of Guatemala is Sergio Francisco Recinos Rivera, who also is the president of the Monetary Board. The vice president is José Alfredo Blanco Valdés. These positions are appointed by the President of the Republic every four years.
The organizational structure of the Central Bank of Guatemala is chaired by the Monetary Board, integrated according to Guatemala’s Constitution. An Insurance Advisory Technical Council is a body that advises the Monetary Board on insurance and intermediation subjects.
Presidency
Below the board are the president—who proposes monetary, exchange, and credit policies to the board—and the vice president, who also heads the board.
Execution Committee
Executes de Monetary, Exchange, and Credit Policies. Members are chosen and coordinated by the President.
Internal Audit
Developers of independent insurance assessments to make it as objective as possible, bring value, and propose improvements. Its administrative units include studies, financial, operative, risks, and technology audits.
Compliance Office
Responsible for monitoring compliance with the regulations against money laundering. It prevents and suppresses financing of terrorism and enforces the programs, rules, procedures, and controls established by the Central Bank of Guatemala.
General Management
It administers the central bank of Guatemala so it functions efficiently.
Economic Management
Responsible for the design and monitoring of the monetary, exchange, and credit policy of the country, the identification of the main economic macro-trends, their analysis and interpretation. They prepare the main economic statistics needed for monetary policy decision-making.
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Architecture of the Central Bank of Guatemala
The building of the Central Bank of Guatemala has a brutalist style, meaning it has a utilitarian, heavy-looking approach with rough surfaces and geometric shapes. In this structure, it opposes the overlapping design that is purely ornamental.
Raúl Minondo, José Montes Córdova, Dagoberto Vásquez Castañeda, and Roberto González Goyri designed it at 131 ft high (40 mt) in the Civic Center of the capital. Mayan motifs are in the facades of the building, highlighting Guatemala’s native heritage.
See also: A Vocabulary Guide to Money and Finance in Spanish
[Guatemala City, Guatemala] Banco de Guatemala Building Facade | © eberhash/Flickr
Learn the Language of Guatemala
Did you like the history and reason to be of the Central Bank in Guatemala? It’s interesting how financial institutions have been created in Latin America. Although making them seems the right and natural path, the political systems were always a threat and entailed open fights across the nations.
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