BOARD OF DIRECTORS

BOARD RESOLUTION NO. 036/2023

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT – MODIFY THE LEGAL RESERVE REGULATION FOR FINANCIAL INTERMEDIATION ENTITIES.

VIEWED:

• The Political Constitution of the State of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia and its modifications.
• Board Resolution No. 095/2022 of October 6, 2022, which approves the Statute of the Central Bank of Bolivia.
• Board Resolution No. 076/2022 of August 26, 2022, which approves the Legal Reserve Regulation for Financial Intermediation Entities and its modifications.
• Report BCB-APEC-INF-2023-4 of February 15, 2023, from the Economic Policy Advisory and Financial Entities Management.
• Report BCB-GAL-SANO-INF-2023-2 of February 15, 2023, from the Legal Affairs Management.

CONSIDERING:

That Article 327 of the Political Constitution of the State states that the Central Bank of Bolivia (BCB) is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That Article 328 of the Political Constitution of the State states that the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by law, has the following attributes: 1. Determine and execute monetary policy. 2. Execute exchange rate policy. 3. Regulate the payment system. 4. Authorize the issuance of currency. 5. Administer international reserves.

That Article 1 of Law No. 1670 of the Central Bank of Bolivia, modified by Article 67, section A3, numeral 1 of Law No. 1864 of June 15, 1998, on Popular Property and Credit, determines that the BCB is a State institution, of public law, of an autarkic nature, of indefinite duration, with its own legal personality and assets and with legal domicile in the city of La Paz. It is the sole monetary and exchange rate authority of the country,

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with administrative, technical and financial competence and specialized normative powers of general application.

That Article 2 establishes that the object of the BCB is to seek the stability of the internal purchasing power of the national currency.

That Article 3 of Law No. 1670 provides that the BCB will formulate policies of general application in monetary, exchange rate and payment system matters for the fulfillment of its object.

That Article 7 of Law No. 1670 determines that the BCB may establish Legal Reserves of mandatory compliance by Banks and FIEs. Their composition, amount, method of calculation, characteristics and remuneration, will be established by the Board of Directors of the Bank, by an absolute majority of votes. The control and supervision of the Legal Reserve will correspond to the current Financial System Supervisory Authority.

That Article 8 of Law No. 1670 states that the reserve and deposits constituted in the BCB by banks and financial entities will not be subject to any type of seizure or retention by third parties.

That Article 37 of Law No. 1670 establishes that the BCB will be the depository of the liquid reserves intended to cover the Legal Reserve and attend the payment system and other operations with the BCB of FIEs subject to the authorization and control of the Financial System Supervisory Authority.

That Article 44 of Law No. 1670 provides that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized normative rules of general application and internal rules; as well as establishing administrative, operational and financial strategies of the Issuing Entity, approving their respective short and medium-term programs.

That subsections a) and i) of Article 54 of Law No. 1670, indicate as attributes of the BCB Board of Directors to issue rules and adopt general decisions that are necessary for the Issuing Entity to fulfill the functions, competencies and powers assigned by the Law; to fix and regulate the administration of the Legal Reserve to which banks and other financial entities must be subject, disposing of measures for its compliance; as well as to approve, modify and interpret the Statute and Regulations of the BCB by two-thirds of the votes of all its members, without the need for an additional administrative act.

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That subsections 1) and 7) of Article 10 of the BCB Statute, determine that the Board of Directors of the Issuing Entity has the attributes to approve general decisions and issue rules that are necessary for the BCB to fulfill the functions, competencies and powers assigned to it by the Law; to establish by absolute majority of votes, Legal Reserves of mandatory compliance by FIEs and approve their composition, amount, calculation, characteristics, forms of administration, custody and remuneration, in accordance with the Regulation.

That Article 24 refers that resolutions and decisions of the Board of Directors are adopted by a simple majority of votes of the members present in a meeting, except in cases where Law No. 1670 or this Statute require qualified majorities.

That Article 26 of the Statute of the Issuing Entity stipulates that the Board of Directors pronounces itself on matters within its competence through resolutions. It can also do so through decisions that will be expressly recorded in the minutes. Likewise, every draft resolution of the Board of Directors must be motivated and justified by a technical report from the Management or Managements to which the matter subject to the resolution corresponds and by a report from the Legal Affairs Management. These reports must be sent to the Board of Directors by the General Management with its recommendation.

That the Legal Reserve Regulation for Financial Intermediation Entities, approved by Board Resolution No. 076/2022 of August 26, 2022, provides in its Article 1 that its object is to fix and regulate the administration of the Legal Reserve and the resources resulting from its modification, in order to have instruments of monetary regulation and preservation of the stability of the financial system.

That Article 2 of the Legal Reserve Regulation for Financial Intermediation Entities provides that all FIEs, authorized for their operation by the Financial System Supervisory Authority ASFI, are subject to the provisions of this Regulation.

That the Economic Policy Advisory and Financial Entities Management through Report BCB-APEC-INF-2023-4, conclude that the proposal for modification to the Regulation is technically viable, therefore they recommend to the Board of Directors the approval of the proposal for modification to the Legal Reserve Regulation for FIEs.

That the Legal Affairs Management, through Report BCB-GAL-SANO-INF-2023-2 concludes that the content of the draft modifications to the Legal Reserve Regulation for FIEs, proposed by the APEC and GEF is legally viable, since it does not contravene the legal order, recommending to the Board of Directors of the Issuing Entity its approval.

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THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Incorporate the Sole Additional Provision of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

Sole Additional Provision

The BCB may authorize temporary exemptions from what is provided in this Regulation through express communication from the General Management to the ASFI.

Article 2.- The modifications to the Legal Reserve Regulation for Financial Intermediation Entities will enter into force as of February 22, 2023.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, February 16, 2023

SIGNED. ROGER EDWIN ROJAS ULO, Oscar Ferrufino Morro, Gabriel Herbas Camacho, Gumerindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.