2023-01-16 | RESOLUCIONES DE DIRECTORIO N° 012/2023Added · Updated
The Board of Directors of the Central Bank of Bolivia amends the Regulation for the Administration of International Reserves to update investment policies and instruments. The resolution modifies Article 4 to require annual approval of the Investment Policy, expands Article 19 to authorize specific operations like securities lending and derivatives, and sets a 1% market risk limit in Article 24 while excluding certain asset swaps from Value at Risk calculations. These changes take effect immediately upon approval.
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International Reserves, being able to invest and deposit them in custody, as well to dispose of and pledge them, in the manner it considers most appropriate for the fulfillment of its object and functions and for their adequate safeguard and security. It may, likewise, purchase foreign exchange hedging instruments with the objective of reducing risks and that in the case of the pledge of gold, this must have Legislative approval.
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Article 1.- Approve the Modification of Article 4 of the Regulation for the Administration of International Reserves, with the following text:
“Article 4.- (Annual Investment Policy)
The Board of Directors will approve the Annual Investment Policy (AIP) of the International Reserves before the start of each management period and the corresponding modifications during the management period.”
Article 2.- Approve the Modification of Article 19 of the Regulation for the Administration of International Reserves, with the following text:
“Article 19.- (Investment operations and instruments)
I. The authorized investment operations are:
- Establishment of time deposits
- Securities Lending
- Purchase-sale of assets, titles, and securities
- Purchase-sale of foreign exchange
- Risk hedging with derivatives
- Asset swap
- Foreign exchange swaps
II. The authorized investment instruments are:
- Overnight Deposits
- Commercial Paper
- Certificates of Deposit
- Time Deposits
- Bills
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- Notes
- Bonds
- Strips
- Medium Term Notes
- Floating Rate Notes
- Treasury Inflation Protected Securities (TIPS)
- Interest rate futures/forward contracts
- Foreign exchange futures/forward contracts”
Article 3.- Approve the Modification of Article 24 of the Regulation for the Administration of International Reserves, with the following text:
“Article 24.- (Market risk)
I. The maximum expected loss in a year under a 95% confidence level, measured by the Market Value at Risk (Market VaR) is 1% for International Monetary Reserves denominated in United States dollars.
II. Instruments resulting from asset swap operations, derived from the temporary liquidity needs of International Reserves, which are denominated in United States dollars, will not be included in the calculation of Market VaR.”
Article 4.- Approve the Modification of the Transitional Provision of the Regulation for the Administration of International Reserves, with the following text:
“TRANSITIONAL PROVISION
Investments of International Reserves made in authorized instruments prior to and not contemplated in this Regulation may be maintained until their maturity or redemption. In the case of sale or if asset swap operations are carried out to cover the liquidity needs of International Reserves and fulfill their object, the involved areas will present technical and legal reports with the appropriate
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justification for the approval of the BCB Board of Directors.”
Article 5.- The modifications to the Regulation for the Administration of International Reserves will enter into force from their approval.
Article 6.- The Presidency and the General Management are charged with the compliance of this Resolution.
La Paz, January 16, 2023
SIGNED. ROGER EDWIN ROJAS ULO, Oscar Ferrufino Morro, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán.
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