Resolution No. JPRM-2022-004-M

THE MONETARY POLICY AND REGULATION BOARD

CONSIDERING:

That, Article 226 of the Constitution of the Republic of Ecuador prescribes that public servants and persons acting under state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law;

That, Article 227 of the same Constitution states that Public Administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That, the first paragraph of Article 303 of the Constitution of the Republic determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive authority of the Executive Branch and will be implemented through the Central Bank of Ecuador;

That, Article 40 of the Organic Monetary and Financial Code states: “Public Sector Deposits. Public resources of institutions, agencies, and companies of the non-financial public sector shall be maintained in deposit at the Central Bank of Ecuador, in accordance with the regulations issued by the Monetary Policy and Regulation Board.

Entities of the national financial system and those qualified within auxiliary payment systems will participate in the collection of public resources, through collector accounts in the name of non-financial public entities, in accordance with the regulations issued by the Monetary Policy and Regulation Board. The balance of said accounts will be transferred to the accounts corresponding to the respective public institution at the Central Bank of Ecuador, in accordance with the regulation issued for this purpose.

Entities of the national financial system may not open, in the name of public institutions, any other type of account, unless they have authorization granted by the Monetary Policy and Regulation Board, prior to a favorable report from the entity in charge of public finances. This prohibition will apply especially to accounts with check-writing capacity.

Entities of the national financial system will clearly identify in their records the ownership of the accounts referred to in the preceding paragraph and will remit to the Central Bank of Ecuador the balances and transactions carried out against them, with the frequency determined by said Bank.

Auxiliary payment systems may not collect public resources in their own accounts.

The Central Bank of Ecuador will sanction the non-observance or failure to comply with the provisions of this article as a serious infringement.”;

That, Article 41 of the same Code, in its pertinent part, states: “Financial Operations of the Non-Financial Public Sector. Institutions, agencies, and companies of the non-financial public sector must carry out, through the Central Bank of Ecuador or its accounts, all payments they must make, as well as all financial operations and services they require, including foreign trade operations, in accordance with the regulations and exceptions issued by the Monetary Policy and Regulation Board. (...)”;

That, Article 47.1 of the Organic Monetary and Financial Code created the Monetary Policy and Regulation Board as part of the Executive Branch, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

That, Article 47.6 of the same Code, regarding the functions of the Monetary Policy and Regulation Board, among others, establishes: “(...) 1. Formulate policy in the monetary field and observe its application by the Central Bank of Ecuador, to preserve the integrity and sustainability of the dollarization monetary system and the financial system, in accordance with the provisions of this Code; (...) 7. Formulate the policy of the operations of the Central Bank of Ecuador; (...) 12. Regulate the central payment system, as well as the regulation, permission, registration, surveillance, and supervision of auxiliary payment systems; (...) 25. Set commissions and fees for services of the Central Bank of Ecuador; (...)”;

That, Articles 101, 103, 104, and 109 of the aforementioned Code correspond to electronic payment means, the national payment system, the central payment system, and auxiliary payment systems, respectively, establishing generally that the Monetary Policy and Regulation Board will issue the corresponding regulations on said means and systems;

That, the Twentieth General Provision of the Organic Monetary and Financial Code establishes: “The Monetary Policy and Regulation Board and the Financial Policy and Regulation Board will establish the amounts and deadlines from which the payment of public services will be carried out through the national payment system via account debit, bank transfer, credit card payment, debit, or other electronic payment means.

All legal and natural persons with a Unique Taxpayer Registry (RUC) will have at least one electronic collection channel of their choice, under the terms and conditions established by the Monetary Policy and Regulation Board.”;

That, the Fortieth-Fourth Transitional Provision of the aforementioned Code prescribes: “Resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary Policy and Regulation Board and Financial Policy and Regulation Board, and norms issued by control agencies, will remain in effect until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board resolve what corresponds, within their respective competencies.”;

That, Chapter XII “Of Public Sector Deposits”, of Title I: “Monetary System”, of Book I: “Monetary and Financial System”, of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary Policy and Regulation Board and Financial Policy and Regulation Board, regulates everything related to deposits and financial investments of the financial and non-financial public sector, whose analysis and treatment corresponds to this Board;

That, it is necessary to adapt the regulatory norms applicable to deposits and financial investments of the financial and non-financial public sector, which includes their definitions and scope, the accounts of sector entities at the Central Bank of Ecuador, collector accounts in national financial system entities acting as correspondents, the execution of public resource payments through the interbank payment system, entities qualified within auxiliary payment systems authorized to collect public resources, as well as the remuneration of public sector accounts, the third-party money investment banking service, and the opening of collector accounts for institutions that are not part of the public sector but collect public resources;

That, it is the authority of the Monetary Policy and Regulation Board to resolve on the norms contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary Policy and Regulation Board and Financial Policy and Regulation Board, that relate to the monetary field, with the purpose of incorporating said provisions into the own regulations of the Monetary Policy and Regulation Board, prior to the analysis of the pertinence of each norm and provision, in a disaggregated manner;

That, the Monetary Policy and Regulation Board, in an ordinary session by mixed modality, on January 28, 2022, reviewed the proposal sent via memorandum No. BCE-BCE-2022-0015-M, of January 26, 2022, by the General Manager of the Central Bank of Ecuador to the President of the Monetary Policy and Regulation Board, as well as the technical report No. BCE-SGSERV-2022-005/DNSF-2022-066/DNSP-2022-033, of January 21, 2022, and the legal report No. BCE-CGJ-011-2022, of January 26, 2022; and,

In exercise of its functions and in attention to Article 47.7 of the Organic Monetary and Financial Code, the Monetary Policy and Regulation Board resolves to issue the:

PUBLIC SECTOR DEPOSIT RULE

SECTION I.- NORMS REGULATING DEPOSITS AND FINANCIAL INVESTMENTS OF THE FINANCIAL AND NON-FINANCIAL PUBLIC SECTOR:

SUBSECTION I.- DEFINITIONS AND SCOPE:

Art. 1.- Definitions.- For the purposes of this section, the following shall be understood:

1. Correspondency Agreement.- Agreement that formalizes the authorization of an entity of the national financial system or an entity qualified within auxiliary payment systems, to act as a correspondent of the Central Bank of Ecuador in the collection of public resources.

2. Operation Agreement for Collection.- Agreement through which the mutual responsibilities assumed by the correspondent entity and the non-financial public entity are specified, regarding information confidentiality, service levels, definition of communication mechanisms for the transfer and exchange of online information, and other specific procedures within the collection process that the public entity considers relevant.

3. Collection Services Agreement.- Agreement through which the Central Bank of Ecuador agrees with any public sector entity to provide the collection and deposit reception service through correspondent entities, according to the parameters, procedures, and tariffs currently in effect for this purpose.

4. Correspondent.- The entity that, once qualified as an auxiliary payment system, is authorized by the Central Bank of Ecuador to collect public resources.

5. Revolving Fund Accounts.- Accounts opened in public banking, with the objective of attending urgent payments or to develop special projects and programs.

6. Collector Accounts.- Accounts opened in the name of non-financial public entities, in entities of the national financial system, correspondents of the Central Bank of Ecuador, which have the objective of collecting public resources.

In the case of auxiliary payment systems, qualified as correspondents for the collection of public resources, collector accounts will be those opened at the Central Bank of Ecuador, in the name of public entities solely for the purpose of recording and executing the values received for public collection. Auxiliary payment systems may not collect public resources in their own accounts.

7. Correspondent Financial Entity.- Entity of the national financial system authorized by the Central Bank of Ecuador to carry out the collection of public resources.

8. Non-Financial Public Entity.- Institution, entity, agency, or company of the non-financial public sector that receives resources directly from the Ecuadorian State to manage the provision of goods and services.

9. Financial Investment.- Placement of public resources that can be made in different financial instruments.

10. Physical Payment Means.- Physical payment means are banknotes, coins, and checks.

11. Collection.- Collection of money corresponding to public revenues, through entities authorized for this purpose by the Central Bank of Ecuador.

For the exclusive scope of what is provided in this resolution, and without prejudice to what the Internal Revenue Service may provide, the collection date is the date of receipt of money or the effective realization of a deposit made by a client or user of public services, through any channel or means enabled by the correspondent financial entity.

12. Public Services.- For the purposes of this resolution, public services shall be understood specifically as water supply, electricity, sewage,

public telephone, and garbage collection provided by Decentralized Autonomous Governments or public companies.

13. Interbank Collection System.- Mechanism that allows channeling collection orders, instructed by a collecting client, to a collecting financial entity to order the debit of the account that a paying client maintains in a paying financial entity.

14. Interbank Payment System.- Mechanism that allows, through the Central Bank of Ecuador and within the national scope, the electronic transfer of funds between checking, savings, cardholder, or special payment accounts of clients of different financial entities.

15. Auxiliary Payment Systems.- Entities of the national financial system authorized by the Central Bank of Ecuador to carry out resource transfers, money remittances, or compensation among their different participants.

Art. 2.- Scope.- The scope of application of this regulation will be for all institutions, entities, agencies, and companies of the public sector included in Articles 225 and 315 of the Constitution of the Republic of Ecuador and for all entities of the national financial system and entities qualified as auxiliary payment systems.

SUBSECTION II.- OF THE ACCOUNTS OF PUBLIC SECTOR ENTITIES AT THE CENTRAL BANK OF ECUADOR:

Art. 3.- Institutions, entities, agencies, and companies of the public sector will maintain accounts at the Central Bank of Ecuador and use its services to carry out collections, payments, and monetary transfers directly.

Art. 4.- Any non-financial public entity, with or without economic and/or budgetary and/or financial autonomy, must certify and/or deposit the entirety of public financial resources collected in the respective accounts opened at the Central Bank of Ecuador.

SUBSECTION III.- OF COLLECTOR ACCOUNTS IN NATIONAL FINANCIAL SYSTEM ENTITIES CORRESPONDENTS OF THE CENTRAL BANK OF ECUADOR:

Art. 5.- To execute their collections, institutions, entities, agencies, and companies of the non-financial public sector will use collector accounts for this purpose, opened exclusively in entities of the national financial system that are correspondents of the Central Bank of Ecuador.

Art. 6.- Entities of the national financial system acting as correspondents of the Central Bank of Ecuador must meet the requirements and procedures established by the latter for this purpose.

Art. 7.- The Central Bank of Ecuador will sign collection services agreements with each of the non-financial public entities that require the collection service, through their correspondent financial entities.

Art. 8.- The Central Bank of Ecuador will determine the conditions, requirements, and terms of the correspondency agreements it signs with national financial entities.

The Central Bank of Ecuador may issue the formats, means, and instructions necessary for their application.

Art. 9.- The holder of the collector account will be the non-financial public entity requiring the service, and the available monetary balances and transactions carried out against said account, resulting from collection, will be transferred by the correspondent financial entity to the Central Bank of Ecuador no later than the first business day following the collection. Collections made on weekends or holidays are considered collections corresponding to the next business day.

Every collector account in its denomination must prefix the following signatory: "BCE-", after which the denomination required by the non-financial public entity to differentiate the resources entering said collector account will be included.

Art. 10.- The correspondent financial entity must remit to the Central Bank of Ecuador the information on available monetary balances and transactions carried out against all collector accounts within the term established in the preceding article. Based on this information, the Central Bank of Ecuador will debit the collected values from the financial entities' accounts to credit the funds, after receiving the reconciliation and adjustment information in the accounts of the public sector entities.

The Central Bank of Ecuador may issue the formats, means, and instructions necessary for their application.

Art. 11.- Once the Central Bank of Ecuador debits the collected values for any concept from the correspondent financial entity, the latter must carry out the respective reconciliation and adjustments within a maximum term of two days from the effective collection, identifying the deposit codes determined by the entity in charge of public finances.

The Central Bank of Ecuador may issue the necessary guidelines for the reconciliation procedure.

Art. 12.- Resources of non-financial public entities, deposited in collector accounts in correspondent financial entities, are unseizable and cannot be subject to any type of enforcement or preventive or precautionary measure.

Art. 13.- Non-financial public entities may maintain more than one collector account in the same correspondent financial entity, with the objective of differentiating the types of public services provided and on which the collection is generated.

Art. 14.- The Central Bank of Ecuador will act directly as the collecting financial entity, through the Interbank Collection System, and will be governed by the regulations issued by the Monetary Policy and Regulation Board.

Art. 15.- Only and exceptionally, the Monetary Policy and Regulation Board may authorize the opening of accounts that are not collector accounts in entities of the national financial system, provided that the requesting non-financial public entity has a favorable report from the entity in charge of public finances.

Art. 16.- Payments for public services of water supply, electricity, sewage, public telephone, and garbage collection provided by Decentralized Autonomous Governments or public companies, for amounts greater than seventy-six United States dollars (USD 76.00), made through the direct and indirect channels of the correspondent financial entities of the Central Bank of Ecuador, will be carried out exclusively via account debit, electronic money transfer, credit card payment, debit card payment, or other electronic payment means authorized by the Central Bank of Ecuador.

Payments for the public services detailed in this article, for amounts equal to or less than seventy-six United States dollars (USD 76.00), may be made through electronic payment means or by using physical payment means.

Regardless of the amounts indicated in this article, payments for these public services referred to may be made at the counters of the respective public entities.

SUBSECTION IV.- OF THE EXECUTION OF PUBLIC RESOURCE PAYMENTS THROUGH THE INTERBANK PAYMENT SYSTEM SPI WITH CREDIT TO FINANCIAL SYSTEM ACCOUNTS:

Art. 17.- The payment of accrued obligations of institutions, entities, agencies, and companies of the public sector will be carried out exclusively through the Central Bank of Ecuador, using the Interbank Payment System SPI, by crediting these resources to the accounts of final beneficiaries, clients of the national financial system.

Art. 18.- The Interbank Payment System SPI will have operational and normative mechanisms to carry out direct electronic transfer orders from the type accounts that institutions, entities, agencies, and companies of the public sector maintain at the Central Bank of Ecuador to the checking, savings, or special accounts that beneficiaries maintain in entities of the national financial system.

Art. 19.- Transfer orders will contain the expenditure concepts that, for the case of the public sector, will be those determined by the entity in charge of public finances, through the Technical Norms of the Financial Administration System.

This expenditure concept must be added within special codes established by the Central Bank of Ecuador, which financial entities must obligatorily incorporate into the statement of the client beneficiary of the transfer.

Art. 20.- The payment of obligations generated between public sector entities may be carried out using specialized systems administered by the Central Bank of Ecuador.

SUBSECTION V.- OF THE EXECUTION OF PUBLIC RESOURCE PAYMENTS - REVOLVING FUND ACCOUNTS:

Art. 21.- Public financial sector entities, with the authority to capture deposits, may open revolving fund accounts with check-writing capacity to non-financial public sector entities, when amounts are equal to or less than five hundred thousand United States dollars (USD 500,000.00), destined to attend urgent payments or for the development of special projects and programs, in accordance with the approval, technical norms, and instructions issued by the entity in charge of public finances and according to instructions imparted by the Central Bank of Ecuador.

The Monetary Policy and Regulation Board will authorize the opening of these accounts for amounts exceeding five hundred thousand United States dollars (USD 500,000.00).

Art. 22.- The term to begin using the resources assigned to these accounts will be thirty (30) days from the date the Central Bank of Ecuador instructs the opening of the account; if within that term the entity has not opened the revolving fund account or has not registered usage movements of the resources, the authorization will become void and the public bank must return said values to the accounts that the authorized entity maintains at the Central Bank of Ecuador.

Art. 23.- Public financial sector entities, with the authority to capture deposits, will verify that the balance of revolving fund accounts, at no time, exceeds the amount approved by the entity in charge of public finances or the Monetary Policy and Regulation Board, as applicable.

No entity of the public financial system may open revolving accounts that do not have the authorization of the entity in charge of public finances or the Monetary Policy and Regulation Board, as applicable.

Art. 24.- The entity in charge of public finances will inform the Monetary Policy and Regulation Board semiannually regarding the approvals granted under the provisions of this subsection.

SUBSECTION VI.- OF PUBLIC SECTOR FINANCIAL INVESTMENTS:

Art. 25.- Non-financial public entities may carry out investments based on their liquidity surpluses, in accordance with what is established in numeral 18 of Article 74 of the Organic Code of Planning and Public Finances and the norms issued on this matter by the entity in charge of public finances. Entities that have a favorable opinion from the entity in charge of public finances are authorized to carry out investments in titles issued by the entity in charge of public finances and for investments in other issuers.

The entity in charge of public finances will inform the Monetary Policy and Regulation Board semiannually regarding