BOARD OF DIRECTORS

BOARD RESOLUTION NO. 062/2023

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT – MODIFICATION OF 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.
• Law No. 393 of August 21, 2013, on Financial Services.
• Supreme Decree No. 4539 of July 7, 2021.
• 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-SADBC-INF-2023-13 of April 10, 2023, issued by the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2023-122 of April 10, 2023, issued by the Legal Affairs Management (GAL).

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 established 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.

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

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

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 to attend to the payment system and other operations with the BCB of EIFs subject to the authorization and control of the Financial System Supervision 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 regulations of general application, and internal rules; as well as for 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 regulations and adopt general decisions that are necessary for the Issuing Entity to fulfill the functions, competencies, and powers assigned by 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 Article 430 of Law No. 393 determines that the BCB may grant liquidity credits to EIFs with the guarantee of the constituted Legal Reserve, as well as with other guarantees determined by the Issuing Entity, in accordance with a regulation approved by its Board of Directors.

That Supreme Decree No. 4539 aims to comprehensively incentivize the use of electricity with the purpose of contributing to the improvement of the environment, energy savings, and efficiency through, among others, financial incentives for the manufacture, assembly, and purchase of electric and hybrid motor vehicles and electric and hybrid agricultural machinery.

That subsections 1) and 7) of Article 10 of the BCB Statute determine that the Issuing Entity's Board of Directors has the attributes to approve general decisions and issue regulations that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by Law; to establish by absolute majority of votes, Legal Reserves of mandatory compliance by EIFs 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 Issuing Entity's Statute stipulates that the Board of Directors pronounces on matters within its competence through resolutions. It may also do so through decisions that will be expressly recorded in the minutes. Likewise, every draft Board of Directors resolution 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 EIFs, authorized for their operation by the

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Financial System Supervision Authority ASFI, are subject to the provisions of this Regulation.

That Report BCB-APEC-SADBC-INF-2023-13 of April 10, 2023, issued by APEC and GEF concludes that EIFs have resources in foreign currency (FC), therefore, given the decrease in both deposits and liquidity in national currency (NC) in the financial system, it is justified for the BCB to adopt measures to allow EIFs to use these FC resources to maintain adequate levels of NC liquidity; recommending to the consideration of the BCB Board of Directors the approval of modifications to the Legal Reserve Regulation for EIFs with the objective of strengthening NC liquidity in the financial system.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2023-122, concludes that the proposal of APEC and GEF aims to modify the Legal Reserve Regulation for EIFs in its Articles 30, 32, 38, and 41, through which it is intended that EIFs can have a greater amount of resources in national currency, to which effect they can withdraw the foreign currency resources existing in the CPVIS II, CPVIS III, FIUSEER-FC, and CPRO funds that are not securing liquidity loans. Finally, it concludes that the content of the draft modifications to the Legal Reserve Regulation for Financial Intermediation Entities, proposed by APEC and GEF, is legally viable insofar as it does not contravene the legal order, thus recommending its approval to the Board of Directors.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Modify Article 30 (Constitution and purpose of the Fund for Credits destined to the Productive Sector and Social Interest Housing II) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

"Article 30 (Constitution and purpose of the Fund for Credits destined to the Productive Sector and Social Interest Housing II).

The Fund for Credits destined to the Productive Sector and Social Interest Housing II (CPVIS II Fund) is constituted with the available resources resulting from the modifications to the Legal Reserve rates in effect since April 30, 2018, and subsequent voluntary contributions.

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EIFs may make voluntary contributions to the CPVIS II Fund until November 30, 2023, only with foreign currency resources deposited in the BCB account at its correspondent bank abroad.

EIFs may request the BCB for the partial or total return of their participation in the CPVIS II Fund that is not securing national currency liquidity loans. Alternatively, EIFs may sell the resources that are not securing national currency liquidity loans to the BCB in accordance with what is established in the Exchange Operations Regulation.

The return of voluntary contributions, at the request of EIFs, will be made in the EIFs' accounts abroad. In the event that the EIF does not have its own account abroad, the EIF will communicate in writing to the BCB the account to which the return will be credited. In both cases, the BCB will not charge the Commission for the transfer of funds abroad for the financial system, established in the 'Table of Commissions for BCB Services.'

Article 2.- Modify Article 32 (Constitution and purpose of the Fund for Credits destined to the Productive Sector and Social Interest Housing III) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

"Article 32 (Constitution and purpose of the Fund for Credits destined to the Productive Sector and Social Interest Housing III).

The Fund for Credits destined to the Productive Sector and Social Interest Housing III (CPVIS III Fund) is constituted with the available resources resulting from the modifications to the Legal Reserve rates in effect since April 8, 2019. The resources in this Fund may be used by EIFs to guarantee liquidity loans to the EIFs themselves.

EIFs may request the BCB for the partial or total return of their participation in the CPVIS III Fund that is not securing national currency liquidity loans, for its sale to the BCB in accordance with what is established in the Exchange Operations Regulation."

Article 3.- Modify Article 38 (Constitution of the Fund for Incentive for the Use of Electric and Renewable Energy) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

"Article 38 (Constitution of the Fund for Incentive for the Use of Electric and Renewable Energy).

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The Fund for Incentive for the Use of Electric and Renewable Energy (FIUSEER) is constituted in the BCB, in national currency (FIUSEER-NC) with the resources from the CAPROSEN-NC Fund and in foreign currency (FIUSEER-FC) with the resources from the CAPROSEN-FC Fund that did not guarantee liquidity loans with the BCB as of September 30, 2021, and December 22, 2022.

Likewise, it will be constituted in national currency (FIUSEER-NC) with the resources from the CAPROSEN-NC Fund and in foreign currency (FIUSEER-FC) with the resources from the CAPROSEN-FC Fund resulting from the early cancellation and maturity of liquidity loans with the guarantee of the CAPROSEN Fund.

Additionally, seventy percent (70%) of the resources of each EIF in the FIUSEER-FC, which are not securing liquidity loans with the BCB as of April 3, 2023, will become part of their participation in the CPRO-FC Fund.

EIFs may request the BCB for the partial or total return of their participation in the FIUSEER-FC that is not securing national currency liquidity loans, for its sale to the BCB in accordance with what is established in the Exchange Operations Regulation."

Article 4.- Modify Article 41.- (Constitution of the Fund for Credits destined to the Productive Sector) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

"Article 41.- (Constitution of the Fund for Credits destined to the Productive Sector).

The Fund for Credits destined to the Productive Sector (CPRO Fund) was constituted in the BCB, in national currency (CPRO-NC Fund) with the available resources resulting from the modification of the Legal Reserve rate in NC Titles-MNUFV in effect since January 10, 2022, and the modification of the Legal Reserve rate in NC Titles-UFV in effect since December 12, 2022; and in foreign currency (CPRO-FC Fund) with the available resources resulting from the modification of the Legal Reserve rate in FC Titles-MVDOL in effect since January 10, 2022, and the modification of the Legal Reserve rate in FC Titles-MVDOL in effect since December 12, 2022; in addition to the voluntary contributions of EIFs in FC and deposited in the BCB account at its correspondent bank abroad, made from January 18, 2022, to December 29, 2023.

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Likewise, it will be constituted in foreign currency (CPRO-FC Fund) with seventy percent (70%) of the resources of the FIUSEER-FC, which are not securing liquidity loans with the BCB as of April 3, 2023.

The validity of this fund will be until March 31, 2025. The resources of each EIF in the fund will be returned by the BCB upon the expiration of the fund in accordance with what is provided in numeral 9 of article 42.

EIFs may request the BCB for the partial or total return of their participation in the CPRO-FC that is not securing national currency liquidity loans, for its sale to the BCB in accordance with what is established in the Exchange Operations Regulation."

Article 5.- The modifications to the Legal Reserve Regulation for Financial Intermediation Entities will enter into force as of April 17, 2023.

Article 6.- The Presidency and the General Management are charged with the compliance of this Resolution.

La Paz, April 12, 2023

SIGNED. OSCAR FERRUFINO MORRO, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.