BOARD OF DIRECTORS

BOARD RESOLUTION NO. 077/2023

SUBJECT:

MONETARY OPERATIONS MANAGEMENT AND ECONOMIC POLICY ADVISORY – APPROVING THE CONDITIONS AND CHARACTERISTICS FOR EXCEPTIONAL REPO OPERATIONS WITH THE CENTRAL BANK OF BOLIVIA, UNDER ARTICLE 532 OF LAW NO. 393 ON FINANCIAL SERVICES.

VIEWED:

• The Political Constitution of the State (CPE) of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB) and its modifications.
• Law No. 1834 of March 31, 1998, on the Securities Market.
• Law No. 393 of August 21, 2013, on Financial Services.
• The Regulation for Repo Operations approved by the Financial System Supervision Authority (ASFI).
• Board Resolution No. 095/2022 of October 6, 2022, which approves the Statute of the Central Bank of Bolivia.
• Board Resolution No. 149/2015 of August 25, 2015, which approves the Open Market Operations Regulation and its modifications.
• Board Resolution No. 150/2015 of August 25, 2015, which approves the Open Market Operations Regulation for monetary regulation purposes with securities issued by the Central Bank of Bolivia or the General Treasury of the Nation and its modifications.
• Board Resolution No. 103/2020 of September 29, 2020, which approves the Repo Operations Regulation and its modifications.
• Report BCB-GOM-SOMA-INF-2023-59 of May 11, 2023, issued by the Monetary Operations Management (GOM) and Economic Policy Advisory (APEC).
• Report BCB-GAL-SANO-DLBCI-INF-2023-156 of May 11, 2023, from the Legal Affairs Management (GAL).

---

//2. B.R. No. 077/2023

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 Articles 3, 6, and 38 of Law 1670 establish that the BCB will formulate general application policies in monetary matters, execute monetary policy, and regulate the quantity of money and credit volume according to its monetary program, being able to issue, place, and acquire securities and carry out other open market operations, as well as effect other new operations that are compatible with the object of the BCB.

That Article 44 and subsections a) and d) of Article 54 of Law No. 1670 state that the Board of Directors of the BCB is responsible for defining its policies, specialized general application regulations, and internal norms, as well as establishing administrative, operational, and financial strategies; in addition, it has the authority to issue norms and adopt general decisions that are necessary for the Issuing Entity to fulfill the functions, competencies, and powers assigned by the Law, and to issue norms for the open market operations carried out by the BCB.

That Law No. 393 on Financial Services in Articles 119 and 532 provides that financial intermediation entities are authorized to carry out repo operations and establishes that to facilitate acquiring entities, within resolution processes, the absorption of the impact that the acquisition of assets and the assumption of liabilities entails, the Central Bank of Bolivia – BCB may flex its legal reserve policy and will facilitate liquidity windows regarding these entities.

That the Regulation for Repo Operations contained in the ASFI approval, in Book 4th, Title IV, Chapter I, Section 1 of the Compilation of Norms for the Securities Market, regulates the norms and procedures for stock market repo operations in the national securities market, complying, where applicable, with what is established in Law No. 1834 on the Securities Market (LMV) and other applicable provisions, and indicates that operations in which the BCB acts as counterparty are carried out only with securities registered in the Securities Market Registry (RMV) and in at least one Stock Exchange, according to the BCB Repo Operations Regulation.

---

//3. B.R. No. 077/2023

That subsections 1) and 5) of Article 10 of the BCB Statute determine that the Board of Directors of the Issuing Entity has the authority to approve general decisions and issue the norms that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by the Law, and to approve the policy and norms for open market operations as well as to monitor their execution.

That paragraph II of Article 14 of the Open Market Operations Regulation establishes that operations in the secondary market can be carried out with any security issued by the General Treasury of the Nation, the BCB, or with securities from private issuers expressly authorized by the BCB Board of Directors, through repo operations and others authorized.

That Articles 4 and 6 of the Repo Operations Regulation establish that the Central Bank of Bolivia repo operation (OR-BCB) consists of the sale carried out by an agent (reportor, at a certain price (outward value) calculated on the basis of unit values, of securities issued by the BCB, the TGN, and/or securities from private issuers, to a second agent (reportee), with the commitment of the reportor to repurchase the securities, or other equivalents, within a term and at a price (inward value) pre-established on the date of the transaction.

That Report BCB-GOM-SOMA-INF-2023-59 of May 11, 2023, issued jointly by the GOM and APEC, recommends to the BCB Board of Directors to approve the conditions and characteristics for exceptional repos with the BCB under Article 532 of Law No. 393 on Financial Services, as provided in Article 14 of the Open Market Operations Regulation.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2023-156, concludes that there is no legal impediment for the BCB Board of Directors, in accordance with its legal functions and powers, to approve other conditions and characteristics for exceptional repo operations with the Central Bank of Bolivia, under Article 532 of Law No. 393; in addition, the Open Market Operations Committee through its President, the Monetary Operations Management, and the Economic Policy Advisory must submit reports to the Board of Directors regarding the aforementioned exceptional repo operations, according to applicable legal regulations, consequently recommending its approval.

---

//4. B.R. No. 077/2023

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Approve the conditions and characteristics for exceptional repo operations with the Central Bank of Bolivia, under Article 532 of Law No. 393 on Financial Services, which appear in the Annex of this Resolution.

Article 2.- This Board Resolution will enter into force from the date of its publication.

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

La Paz, May 12, 2023

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

---

//5. B.R. No. 077/2023

ANNEX

CONDITIONS AND CHARACTERISTICS FOR EXCEPTIONAL REPO OPERATIONS WITH THE CENTRAL BANK OF BOLIVIA, UNDER ARTICLE 532 OF LAW NO. 393 ON FINANCIAL SERVICES

1. (Definition). - Exceptional repos are an instrument for exceptional liquidity injection at a longer term and at a lower rate than usual repos.

2. (Authorized Participants). - All financial intermediation entities that carry out the acquisition of assets and the assumption of liabilities of financial intermediation entities in the process of resolution, through current operations.

3. (Admitted Instruments as Collateral). - Public securities issued by the Central Bank of Bolivia (BCB) or the General Treasury of the Nation, and Fixed-Term Deposits (DPF) in national currency with issuer risk rating from AAA to A1, which were issued to natural and/or legal persons until March 31, 2023, with single interest payment at maturity and with coupon payments (does not include DPF with advance interest payment).

4. (Daily Offered Amount). - Defined by the Open Market Operations Committee (COMA).

5. (Maximum Operation Term). - 90 days.

6. (Renewal of Operations). - Up to three renewals under the same original conditions (amount, rate, and term), by note addressed to the BCB five business days in advance of the maturity of each operation.

7. (Repo Yield Rate). - Defined by the COMA.

8. (Application Mechanism). - Money Desk through the "first come, first served" modality.

9. (Early Cancellation of Repos). - Without penalty.

10. (Hedging Mechanism). - Conditions defined by the COMA.

---

//6. B.R. No. 077/2023

11. (Limit). - The resources obtained by the liquidity windows enabled by the BCB must not exceed the amount awarded in a specific resolution procedure.

12. (Control and Supervision). - The control of the adequate destination of these resources will be carried out by the ASFI within the framework of its competencies and procedures established in Law 393 on Financial Services.

13. (Sanctions). - In the event that the ASFI verifies that the amount awarded in the liquidity windows enabled by the BCB exceeds the award amount of an EIF in a specific resolution procedure, regardless of the sanctions it establishes, it must communicate to the BCB within a period not exceeding 15 (fifteen) days, so that the amount awarded in the exceptional repo operation is adjusted to the regular repo rate. Likewise, exceptional repo operations are subject to what is provided by the Repo Operations Regulation and the Operational Guide of the Electronic Auction System regarding non-compliance.

14. (Validity). - Exceptional repos with the BCB will have a validity of 180 calendar days, and its extension will be evaluated by the COMA.