BOARD

BOARD RESOLUTION NO. 066/2023

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

VIEWING:

• 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-INF-2023-11 of April 19, 2023, from the Economic Policy Advisory and the Financial Entities Management.
• Report BCB-GAL-SANO-DLBCI-INF-2023-132 of April 19, 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 on 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 legal personality and its own assets and with legal domicile in the city of La Paz. It is the sole monetary and exchange authority of the country, with administrative, technical and financial competence and specialized regulatory powers of general application.

That Article 2 of Law No. 1670 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 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. Their composition, amount, method of calculation, characteristics and remuneration, will be established by the Board of the Bank, by an absolute majority of votes. The control and supervision of the Legal Reserve will correspond to the current Authority for the Supervision of the Financial System.

That Article 8 of Law No. 1670 states that the reserve and the deposits constituted in the BCB by banks and financial entities will not be subject to any type of attachment 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 to attend to the payment system and other operations with the BCB of EIFs subject to the authorization and control of the Authority for the Supervision of the Financial System.

That Article 44 of Law No. 1670 provides that the highest authority of the BCB is its Board, which is responsible for defining its policies, specialized regulations 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 to issue regulations and adopt general decisions that may be 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.

That Article 430 of Law No. 393 determines that the BCB may grant liquidity credits to EIFs with the guarantee of the Legal Reserve constituted, as well as with other guarantees determined by the Issuing Entity, in accordance with a regulation approved by its Board.

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 Board of the Issuing Entity has the attributes to approve general decisions and issue regulations that may be 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 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 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 operation by the Authority for the Supervision of the Financial System ASFI, are subject to the provisions of this Regulation.

That Article 6 of the Legal Reserve Regulation for Financial Intermediation Entities establishes the Legal Reserve rates on liabilities.

That the Economic Policy Advisory and the Financial Entities Management through Report BCB-APEC-INF-2023-11, conclude and recommend to the Board the approval of the proposal to modify the Legal Reserve Regulation for EIFs.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2023-132, concludes that the content of the project of modifications to the Legal Reserve Regulation for EIFs, proposed by the APEC and the GEF is legally viable, since it does not contravene the legal order, recommending to the Board of the Issuing Entity its approval.

THEREFORE,

THE BOARD OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Modify Article 6 (Legal Reserve Rates) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

“Article 6.- (Legal Reserve Rates)

The legal reserve rates on the liabilities detailed in article 4 of this Regulation are as follows:

a) In NCF and NCFVU:

• Cash Five and a half percent (5.5%) for cash reserve.

Securities Three percent (3.0%) for securities reserve.

b) In FCF and FVU:

• Cash Ten percent (10%) for cash reserve.
• Securities Four percent (4%) for securities reserve for FPs greater than 720 days; and five percent (5%) for the rest of liabilities.

EIFs must constitute the Legal Reserve in Cash, equivalent to a rate of one hundred percent (100%), on the accounts included in “Other Obligations with the public, with companies with state participation and with banks and financing entities” indicated in article 4 of this Regulation.”

Article 2.- 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).

The Fund for Incentive for the Use of Electric and Renewable Energy (FIUSEER) is constituted in the BCB, in national currency (FIUSEER-NCF) with the resources of the CAPROSEN-NCF Fund and in foreign currency (FIUSEER-FCF) with the resources of the CAPROSEN-FCF 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-NCF) with the resources of the CAPROSEN-NCF Fund and in foreign currency (FIUSEER-FCF) with the resources of the CAPROSEN-FCF Fund resulting from the early cancellation and at maturity of liquidity loans with the guarantee of the CAPROSEN Fund.

Additionally, seventy percent (70%) of the resources of each EIF in the FIUSEER-FCF, which are not guaranteeing liquidity loans with the BCB as of April 3, 2023 and seventy-five percent (75%) of the resources of each EIF in the FIUSEER-FCF, which are not guaranteeing liquidity loans with the BCB as of April 24, 2023, will become part of their participation in the CPRO-FCF Fund. While ninety-five percent (95%) of the resources of each EIF in the FIUSEER-NCF, which are not guaranteeing liquidity loans with the BCB as of April 24, 2023, will become part of their participation in the CPRO-NCF Fund.”

Article 3.- 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-NCF Fund) with the available resources resulting from the modification of the Legal Reserve rate on Securities in NCF-NCFVU effective from January 10, 2022 and the modification of the Legal Reserve rate on Securities in NCF-UFW effective from December 12, 2022; and in foreign currency (CPRO-FCF Fund) with the available resources resulting from the modification of the Legal Reserve rate on Securities in FCF-FVU effective from January 10, 2022 and the modification of the Legal Reserve rate on securities in FCF-FVU effective from December 12, 2022; in addition to the voluntary contributions of EIFs in FCF and deposited in the BCB account at its correspondent bank abroad, made from January 18, 2022 to December 29, 2023.

Likewise, it will be constituted in foreign currency (CPRO-FCF Fund) with seventy percent (70%) of the resources of the FIUSEER-FCF, which are not guaranteeing liquidity loans with the BCB as of April 3, 2023 and seventy-five percent (75%) of the resources of the FIUSEER-FCF, which are not guaranteeing liquidity loans with the BCB as of April 24, 2023. It will be constituted in national currency (CPRO-NCF Fund) by ninety-five percent (95%) of the resources of the FIUSEER-NCF, which are not guaranteeing liquidity loans with the BCB as of April 24, 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 at the expiration of the fund in accordance with what is provided in numeral 9 of article 42.”

Article 4.- The modifications to the Legal Reserve Regulation for Financial Intermediation Entities will enter into force as of April 24, 2023.

Article 5.- The Presidency and the General Management are charged with the compliance of this Resolution.

La Paz, April 20, 2023

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