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What Bank of Guatemala is

Banco de Guatemala


The Bank of Guatemala was created in 1945, as an autonomous entity responsible for all of the functions that correspond to a central bank, and in order to establish the monetary conditions that would be able to favor the methodical development of the national economy –both in a local and international scope- preventing the inflationary and speculative tendencies. The most important legal instruments that rule the Bank of Guatemala are: its Organic Law, the Monetary Law, and the Bank Law.

In addition to its responsibility to adapt the means of payment and credit policy to the necessities of the national economy, the Bank also promotes liquidity, solvency and good performance of the banking and financial institutions as well as the proper distributions of the credits; to keep the coordination of the economic and financial activities of the state with the monetary policy specially in its functions as banker, fiscal agent and advisor of the state.

In order to secure the transactions and monetary transferences with other nations, the Bank has to safeguard the economic equilibrium of the country in the international relations, securing the competitive position of the national products, not only in the internal market, but also in the international one. With this purpose, it has to manage properly the country’s international monetary reserves, avoiding the pressures and prejudicial effects on the currency, credit, prices and the different economic activities.


As a public and autonomous institution, the Bank of Guatemala performs those functions inherent to its nature of central bank by designing and implementing the monetary policy that promotes the fundamental conditions in order to achieve and keep the stability of the general, level of prices, impelling the methodical economic development of the country.


We perceive an autonomous and technical central bank, dedicated to carry out the functions inherent to its nature, by designing and implementing a coordinate monetary policy in order to achieve price stability.

A central bank that in order to fulfill with its mission has a strategy of efficient communication, an effective organizational structure, a current normative, modern technology, an efficient delegation for the decision making, an observation system in relation to the performance and evaluation of the plans, and human resources highly qualified and engaged, that applying solid, ethical, and institutional values, generates an harmonic organizational environment.


After the Independence of Central America (1821), a transition process started toward a “Federal National Monetary System” untied of the influences of the Spanish Metropolis. The Mint of Guatemala played an important role in the circulation of money, resorting to gold and silver as principal materials for coining.

After dissolving the Central American Federation (1847, Foundation of the Republic of Guatemala), our country did not establish immediately an own monetary system. Throughout the years, the federal currency and different currency circulated simultaneously.

In 1853 it was agreed to coin the own currency of the country, but due to the limitations of resources only a small quantity of currency was coined. In 1864, the foundation of a private bank was authorized, it would become the only issuer of bills; however, the lenders impeded the project prosper. It was the same – a due to the same cause – for another bank that in 1867 was founded by a group of Guatemalan citizens.

In 1869, just before the collapse of the conservative regime, a monetary reform began based in the weight, divided in decimal units. IN 1870, the Peso parity was decreed with the American dollar. The process of this reform was interrupted by the victory of the liberal troops, the 30th of June, 1871,

The Liberal Revolution continued that reform. In 1881, it established the bimetallism (gold and silver) as a base of the monetary system, and defined the Peso as a monetary unit; currency had unlimited, releasing power, and the state was compelled to coin all gold and silver that the individuals wished to burden. At that point, gold had almost stopped its circulation, because of the law of Gresham; in addition, the public did not accept the decimal system, and preferred the subdivisions used during the Colony: Tostons, Pesetas, Reals, Half-reals and Quarters.

Within that monetary panorama arose issue, deposit and discount banks. Early in the XX Century there were six banks of this kind: Agrícola Hipotecario, Colombiano, Americano, de Guatemala, Internacional and de Occidente.
Between the years 1924 to 1926 there were favorable circumstances to carry out the first monetary and bank reform of the current century, that finished a long period of maladjustments in the exchange values of the national currency produced by the uncontrollable issue of currency without backing. The 26th of November, 1924, the Quetzal was created, as the new monetary unit (linked to the gold standard and in unitary parity with the American dollar). In addition, the 30th of June, 1926. The Central Bank of Guatemala was created with functions of central banking, supported by mixed capital (State and private), and with attributions of a sole issuer.

In the years 1945 and 1946, Guatemala performed the second great monetary and bank reform of the XX Century, thanks to which the Bank of Guatemala was created, of state capital, and that in substitution of the called Central Bank of Guatemala came to the economic and financial world the 1rst. of July, 1945. As a product of that reform there was an advanced legislation contained in the Bank Law, the Monetary Law and the Organic Law of the Bank of Guatemala. This legal and normative heap together with the innovative reforms that national and international changes have demanded, rule the current banking and financial system of the country.


The Bank of Guatemala came into the world with a modern concept of central banking, and with the fundamental responsibility to keep the internal and external stability of the currency with the conditions that promote the economic development of the country. As it is expressed by its Organic Law, and in this way its activities have been guided.

During the 40s, Guatemala was living in an economic lethargy that leant in the cultivation and export of coffee as well as the concessions granted to a foreign enterprise for the cultivation and export of banana. The Executive was practicing a policy of minimal investments, distant from the necessities of infrastructure that the country needed in order to develop its physical and human potential and generate a welfare state.

Banks were putting into practice a credit reduction that descended of Q.27.9 million in 1929 to Q14.0 million in 1944, which explains the reduced quantity of industrial and husbandry investments. On the other hand, the circulating descended a 50% between 1928 and 1933, and it was not until 1941 when it recovered the proper level. The fiscal policy was clearly deflationary.
General Jorge Ubico´s government –as a source of opinion stated – “focused in the budget reduction and the obtaining and treasuring of the fiscal superavit”.

In addition to the facts hereinbefore indicated, it is important to indicate the special context generated during the Second World War that incorporated Guatemala, into the Democratic faction, and more specifically under the influence of the American government.


In finances, in the middle of 1944, when the victory of the allied was foreseeable, the United Nations convoked to a Conference of the United Nations on subjects like currency and finances, celebrated in July of that year, in Bretton Woods, in the United States of America. There experts and theorists of economy met in order to design a new economic order based on the institutional, international, and financial cooperation, in order to put into motion the democratic ideals proclaimed by the enemies of Nazi fascism. Bretton Woods were the agreements adopted in that conclave, which gave an origin to the International Monetary Fund, and the International Reconstruction and Development Bank –known as World Bank -. The IMF came into the world with the mission of making possible the economic – financial exchanges, and avoid that foreign currency quotation might vary excessively the quotation of foreign currency. The IRDB, on the other hand, received a mission to favor the foreign investments, especially in less developing countries.


As that conclave was taking place, in Guatemala the political order that have prevailed since 1821 began to collapse. As a matter of fact, in July 1944, dictator Ubico was overthrown and in October his successor.

The Revolutionary exploit of October allows our country to begin an intense effort to get up to date in social, educative, political, scientific and economic advances that characterize the civilization of the XX Century. Soon, new models of cohabitation based in the representative democracy ruled by the principles of social justice were pursued. A series of public and private entities were established in order to drive Guatemala toward goals of shared welfare. It is enough to cite the foundation of the Ministry of Economy that by that time, our country still did not have. Dr. Manuel Noriega Morales, an important economist who participated in the meetings of Bretton Woods was the representative of that portfolio.
Indubitably, Doctor Noriega Morales, due to his solid academic preparation, his probity and enthusiasm, discipline, was a decisive factor in the preparation and initiation of the monetary reform, of which the foundation of Bank of Guatemala is part of. He headed a team of efficient collaborators that reviewed the financial and banking situation of the country in order to elaborate a diagnostic and formulate action proposals.


Late in 1945 there was a set of legislative dispositions relating to the banking system: Decree 203, issued the 29th of November, that contains the new monetary law; Decree 212, promulgated the 7th day of December that approved the Bretton Woods agreements and authorizes the insertion of Guatemala in the IMF and the IRDB; and Decree 215, promulgated the 11th day of December, which contains the Organic Law of the Bank of Guatemala.

The foundation of the Bank of Guatemala must be considered as a part of a process in which the mentioned decrees are essential part. Also, the establishment of the new central bank is part of a radical reform; it means that it goes toward the roots of all of that related to the mechanisms of banking and credit.
An important fact is the autonomous character that is granted to the Bank of Guatemala as well as its subordination to the Monetary Board’s dispositions, which is conceived as a representative organism of the economic agents, with a margin of action proper enough to define the monetary policy. The Bank of Guatemala began its works the 1rst. day of July, 1948, in Nottebohn building, located on the 10th. Street, and 5th. Avenue, zone 1. During the inauguration, the President of the Republic, doctor Juan José Arevalo, and doctor Noriega Morales began to speak.
Dr. Noriega Morales pronounced a doctrinaire speech, and at the end, he formulated the democratic philosophy, and in that context, the Bank of Guatemala was established.

The first Monetary Board was constituted the 5th. Day of June, 1946, and approved through a Governmental Agreement the 12th. Day of June, 1946. It was integrated by doctor Noriega Morales, who was appointed President of the Bank, Don Alberto Velásquez, appointed Vice-president of the Bank, and Jorge del Pinal Escobar, Gustavo Mirón Porras, Emilio Cordón and Walter Widman L.
Max Jiménez Pinto was the first bank manager.


The Organic Law of the Bank of Guatemala had in mind, on the one hand, to assign the Bank the function of a sole issuer, as a state bank as well as the mission of promoting the creation and maintenance of the most favorable monetary conditions to the methodical development of the national economy. The law makes emphasis in the adaptation of means of payment, and the credit policy to the national interest and the prevention of inflation, speculation and deflation. It also assigns the Bank, the promotion of the methodical management of national banking system, and the coordination of the state activities of economic and financial nature relating to the monetary market, particularly in those cases of fiscal and monetary policy.

In relation to the international scope, the Organic Law grants the central bank the safeguard of the external value and convertibility of national currency as well as a good management of the international monetary reserves and a favorable management of international transferences. Thus, we avoid the improper monetary pressures, and preserve the country against that harmful repercussion that might come from the international context. Finally, the law assigns the Bank a function to look for the economic equilibrium of the country in the Concert of Nations and try to keep national products in a proper position for the national and international competence.

These legislative dispositions have been adapting to the changing circumstances of the national and internal economic evolution. And, naturally have been affected directly by the new world economic order that rules in the last decade of the XX century. So that, the Bank of Guatemala considers today, as a principal mission, to carry out the monetary policy decided by the Monetary Board in order to preserve the national currency value and favor the price stability.

The Bank gives an important place to the economic and financial information in order to benefit the economic agents. And also, and given the economic and financial circumstances of the current world, the Bank pays basic attention to human resources highly qualified and up to date, as well as the systems, methods and proper proceedings to fulfill with the with the tasks that the world demands today from a central bank, and which structure and dimension must be adapted to the changeable circumstances of the international and national economy.

In summary: Nowadays the Bank of Guatemala follows a nationalist conception inserted in the global context, and it organizes its work in support of that conception, and serving to the legitimate interests of Guatemala.