ABSTRACT
Mexico's financial reform illustrates how President Carlos Salinas used 'structural adjustment' policies to engineer new bases of support for the regime and consequently to consolidate his political leadership within the new parameters set by economic globalisation and political democratisation. Mexico's financial reform represents a case where President Salinas redefined the economic role of the state in order to reduce the state's exposure to economic swings and to increase state capacity. The political discourse during this period stressed the importance of improving state capacity to satisfy the needs of the poor. Mexico's 1994 financial crisis illustrated how politically motivated decisions have very often pernicious economic effects. The chapter also provides an overview of the key concepts discussed in this book. It discusses the politics of international finance as the initial source of reform. The chapter analyses the case of the privatisation of the commercial banks and also discusses the reform to the legal status of Banco de Mexico.
