- Who can be a trustee by country and what authorities regulate it.
- Operational functions and legal duties of the trustee in a trust.
- Differences between fiat money and fiduciary money and their historical evolution.
In legal and financial terminology, the word "fiduciary" can refer both to the person or entity that manages assets held in trust , and to certain monetary expressions such as fiat money. It is important to clearly distinguish between these two concepts to avoid confusing the professional management of assets in trusts with the nature of modern money backed by state authority and public trust.
This article gathers and rearranges key information available from leading sources that explain who can be a fiduciary in each country, what exactly a fiduciary does and what responsibilities they assume , as well as clarifying what fiat money is, how it differs from fiat money, and how the monetary system has evolved from the gold standard to the present day.
What is a trustee?
Simply put, a fiduciary is the person or institution that agrees to manage another person's money or assets in their best interest. When someone is appointed and accepts the position, they are legally obligated to manage the assets for the benefit of the owner or beneficiaries , never for their own benefit. This duty of loyalty and diligence, rooted in both ethics and law, is the essence of the fiduciary role.
In practice, a trustee operates under a contract or instrument (such as a trust agreement) that defines their purpose, powers, and controls. This framework governs how they make decisions, how they are accountable, and under what circumstances they can be held liable for damages. Ultimately, what characterizes a trustee is the trust placed in them and the legal obligation to prioritize the interests of others.
Legal framework: who can act as a trustee depending on the country
The regulations governing who is authorized to act as a trustee vary from jurisdiction to jurisdiction . Some countries reserve this role for regulated financial institutions; others also permit accredited law firms. A comparative overview of the main points follows.
| Country | Regulatory body | Who can act as a trustee |
|---|---|---|
| Mexico | CNBV, SHCP, Banxico | Mainly credit institutionsIn certain cases, brokerage firms, Multiple Purpose Financial Companies (SOFOMES), insurance and surety institutions. |
| Panama | Superintendence of Securities | In addition to financial institutions, it is permitted to authorized law firms by the Superintendency of Securities to act as trustees. |
| Colombia | Financial Supervision | Investment funds, banks, social security administrators and voluntary pension funds, among other regulated actors. |
As can be seen, the common denominator is the intervention of supervisory authorities (such as the CNBV, the SHCP and the central bank in Mexico, or the Securities/Financial Superintendency in Panama and Colombia) that authorize and monitor potential trustees, ensuring solvency, suitability and regulatory compliance.
Fiduciary operation: key activities and processes
The fiduciary operation encompasses a set of technical and administrative tasks that allow for the secure creation, implementation, and management of a trust. Among the trustee's typical activities are the preparation and formalization of the trust agreement , a document that establishes the purposes, rules, and limits of its operation.
Upon establishing the trust, the trustee is responsible for compiling the file with all relevant documentation (identification of parties, origin of assets or resources, legal and tax information, among others). This file is essential for demonstrating compliance and facilitating audits.
Once active, the trustee carries out procedures with the relevant authorities (for example, public or regulatory registries), as well as registering the ownership of the assets in the name of the trust when permitted or required by law. This ensures that the assets are properly allocated to the agreed-upon purposes.
On a daily basis, the trustee keeps separate accounts for the trust, separate from their own assets and other responsibilities, in addition to managing the investment of resources and executing financial operations in accordance with the objectives and risk profile established by the contract.
Depending on the needs, the trustee may grant powers of attorney to representatives for specific tasks, always without relinquishing ultimate responsibility. The trustee must also identify, measure, and mitigate the risks associated with managing the assets (operational, legal, and financial).
Another key aspect is the attention to and execution of instructions from the settlor or the technical committee, if any, always within the legal and contractual framework. Where applicable, the trustee may have to execute guarantees linked to the trust, complying with the procedures and safeguarding the rights of the parties.
Finally, when the cause of termination is met or the term arrives, the trustee proceeds to extinguish the trust , liquidating and delivering the assets as agreed and rendering final accounts.
Duties and responsibilities of the trustee
The core of fiduciary responsibility translates into specific obligations. Among these, the first is to defend the trust's assets , protecting them against risks and actions that could unjustifiably diminish them.
The trustee must ensure compliance with the purposes established in the contract, adjusting its management to the objectives of the trust and avoiding deviations that harm the beneficiaries.
There is a permanent duty to periodically render accounts to the settlor and/or the beneficiaries, providing clear, verifiable and timely information on administration, investments, expenses and results.
The trustee is obligated to comply with applicable laws and regulations, including anti-money laundering, prudential criteria, taxation, and reporting requirements.
Even when delegating operational tasks, the trustee cannot delegate their fiduciary responsibility . That is, they are responsible for the supervision and due diligence in the selection and control of any third-party agent.
In all its actions, the trustee must prioritize the interests of the beneficiaries, managing the assets with professional prudence and good faith. If, through fault or negligence, the trustee causes losses to the assets, it may be held financially liable , as established by the contract and the law.
Important: the trust agreement may expand or qualify these obligations, or in certain cases reduce them, although they are rarely eliminated entirely given their essential nature to protect the weaker parties.
Fiduciary responsibility in a broad sense
Beyond the context of trusts, the term "fiduciary responsibility" is also used when a person or body is in charge of the affairs of others. For example, a board of directors has fiduciary responsibility to the shareholders; its duty is to safeguard the company's interests and not personal gain.
In the banking sector, managers and directors must act with loyalty and diligence towards depositors and clients , safeguarding their funds and making prudent decisions that reduce undue risks.
In matters of inheritance, the executor or testamentary executor assumes fiduciary duties over the inheritance, managing the estate and executing the wishes of the deceased in accordance with the law and the will.
Fiat money: what it is and what it isn't
Today, the money in circulation is not backed by precious metals like gold or silver. Central banks do not exchange banknotes for their metal equivalent, but rather for other banknotes or coins of the same denomination. The use of fiat money rests on the confidence that the central bank will preserve its value over time (price stability).
It is important to distinguish it from so-called fiat money or fiat currency (from the Latin "fiat," meaning "let it be done"). These terms are often used interchangeably, and fiat money is frequently also called fiat money , but they are not perfectly equivalent concepts. The defining characteristic of fiat money is its legal tender status within a jurisdiction, mandated by a law of legal tender.
A European Central Bank report published in February 2015 defines fiat money as that established by a government to steer the economy toward a particular means of payment (such as the euro, dollar, or yen). Thus, all fiat money is legally required as a means of payment, while the term "fiat" underscores public confidence in the issuing authority and the stability of its value.
Historical evolution: from merchandise to fiat
Historically, money was originally a commodity with intrinsic value (precious metals), and coins were worth the metal they were made of. Later, coins contained a certain proportion of precious metal, and their value was related to that content.
In a later phase, the use of base metals for coinage became widespread, representing a specific amount of gold or silver deposited in banks. With the introduction of paper money, banknotes appeared that were certificates exchangeable for a specific amount of gold , what we know as the gold standard.
After World War II, it was agreed to use the US dollar as the global reserve currency, guaranteeing its convertibility into gold. This system ended in 1971 with the so-called Nixon Shock, when the dollar's convertibility was suspended, and it became fiat money without metallic backing, but with its value guaranteed by the authorities and the law.
Advantages and considerations of fiat money
One of the advantages of fiat currency is that it does not depend on a single scarce resource like gold. Instead, its value is based on institutional strength and the overall supply of goods and services in the economy , which provides flexibility for monetary policy and the response to shocks.
This flexibility, however, requires discipline: central banks must pursue price stability , a key aspect of macroeconomic analysis for maintaining confidence. The credibility of the monetary authority is the pillar that sustains the purchasing power of fiat money over time.
References, organizations and related fields
In the Latin American fiduciary ecosystem, the Latin American Trust Committee (COLAFI) and professional circles such as Círculo Fiduciario contribute to the dissemination of good practices and the continuous training of specialists.
In the educational and sectoral sphere, there are publications such as Mundo Fiduciario that include news, analysis and practical cases related to fiduciary administration and the development of trusts in the region.
In Mexico, the Bank of Mexico ( Banxico ) plays a key role in monetary and financial matters, in coordination with the system regulators that directly or indirectly affect fiduciary activities.
Within academic and professional circles, there are working papers and opinion pieces on corporate governance, family businesses, and asset structures that address the fiduciary function . For example, there are contributions from leading firms that analyze the role of the fiduciary in ensuring the continuity and professionalization of corporate assets.
Terminological notes and linguistic resources
The word “fiduciary” is widely documented in current Spanish dictionaries. Recent digital resources offer advanced views that highlight grammatical functions and textual citations, with abbreviations that appear when you hover the cursor over them. These types of tools facilitate understanding the nuances of usage in legal and economic contexts.
Related concepts
In legal tradition, references such as the Trebellian fourth may appear , a historical figure of Roman law which, although not synonymous with modern trust, points to the genealogy of trust relationships in the transmission of assets.
In monetary terms, in addition to fiat money and fiduciary money , there are contrasting notions such as commodity money (a good with intrinsic value that functioned as a medium of exchange), as well as theoretical currents such as chartalism or Modern Monetary Theory, which study the role of the State and taxation in the acceptance of money.
Other related debates include the expansion of cashless payments , the hegemony of the dollar, and Austrian school cyclical approaches, which discuss how the fiat nature of money is intertwined with credit cycles and macro stability.
When discussing "fiduciary," it's important to keep in mind two complementary but distinct meanings: the fiduciary as a professional or entity that manages someone else's assets with a duty of loyalty and accountability, and fiat money, whose value rests on public trust and legal authority rather than on a metallic backing. Understanding who can be a fiduciary in each country, what they do, and what responsibilities they assume, while also distinguishing between fiat money and fiat currency—from their historical evolution to their advantages and requirements—provides a comprehensive overview for navigating the intersection of law, finance, and monetary economics with sound judgment.