BOARD OF DIRECTORS

BOARD RESOLUTION NO. 131/2024

SUBJECT: ECONOMIC POLICY ADVISORY, FINANCIAL ENTITIES MANAGEMENT, AND MONETARY OPERATIONS MANAGEMENT – APPROVAL OF THE REGULATION ON THE ESTABLISHMENT OF COMPLEMENTARY RESERVES FOR FINANCIAL INTERMEDIATION ENTITIES.

VIEWED:

The Political Constitution of the State of February 7, 2009 (CPE).

Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB) and its modifications.

Law No. 393 of August 21, 2013, on Financial Services and its modifications.

Board Resolution No. 076/2022 of August 26, 2022, which approves the Regulation on Legal Reserves for Financial Intermediation Entities and its modifications.

Board Resolution No. 095/2022 of October 6, 2022, which approves the Statute of the BCB.

Report BCB-APEC-SADBC-INF-2024-100 of October 9, 2024, issued by the Economic Policy Advisory (APEC), the Financial Entities Management (GEF), and the Monetary Operations Management (GOM).

Report BCB-GAL-SANO-DLBCI-INF-2024-436 of October 10, 2024, issued by the Legal Affairs Management (GAL).

CONSIDERING:

That Article 327 of the Political Constitution of the State states that the 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 specified by law, has among its attributions to determine and execute monetary policy.

That Article 1 of Law No. 1670 on the BCB, modified by Article 67, section A3, numeral 1 of Law No. 1864 of June 15, 1998, on Popular Property and Credit,

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//2. B.D. No. 131/2024 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 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 Articles 7 and 8 of Law No. 1670 determine 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 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 Supervisory Authority of the Financial System, with the reserve and deposits constituted in the BCB by banks and financial entities not being subject to any type of seizure or retention by third parties.

That Articles 37 and 44 of Law No. 1670 establish that the BCB will be the depository of 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 Supervisory Authority of the Financial System; providing 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 norms; as well as establishing administrative, operational, and financial strategies of the Issuing Entity, approving their respective short and medium-term programs.

That subsections a), i), and o) of Article 54 of Law No. 1670 indicate as attributions of the Board of Directors of the BCB to issue norms 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 adhere, 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 numerals 1) and 3) of Article 5 of the Statute of the BCB provide that its Board of Directors has regulatory competence to issue specialized norms in the fields assigned by Law and technical competence for the formulation of policies and the application of instruments that allow it to fulfill its object.

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That Articles 6 and numerals 1), 7), and 30) of Article 10 of the Statute of the BCB provide that the Board of Directors has the attributions 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 Law, as well as to establish, by an absolute majority of votes, legal reserves of mandatory compliance by Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration, in accordance with the Regulation and to carry out follow-up of their execution, 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 paragraph I of Article 24 of the aforementioned Statute of the BCB provides that resolutions and decisions of the Board of Directors are adopted by a simple majority of votes of its members present in a meeting, except in cases where Law No. 1670 or the Statute of the BCB require qualified majorities.

That paragraphs I and II of Article 26 of the Statute of the BCB stipulate that the Board of Directors pronounces itself 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 resolution of the Board of Directors must be motivated and justified by a technical report from the Management or Managements to which the subject matter of the resolution corresponds and by a report from the GAL. These reports must be sent to the Board of Directors by the General Management with its recommendation.

That Article 3 of the Regulation on Legal Reserves for Financial Intermediation Entities and its modifications defines Required Legal Reserve as the amount that Financial Intermediation Entities must deposit in the BCB or in EIFs authorized for Legal Reserve purposes, and defines Constituted Legal Reserve as the amount deposited by Financial Intermediation Entities in the BCB or in Financial Intermediation Entities authorized for Legal Reserve purposes.

That Report BCB-APEC-SADBC-INF-2024-100, issued by APEC, GEF, and GOM concludes that the establishment of Complementary Reserves of Financial Intermediation Entities by the BCB through the proposed regulation has the objective of maintaining liquidity at adequate levels and includes preventive mechanisms of a prudential nature by considering returns and exceptions in the event of possible liquidity tensions and the particularities of certain Financial Intermediation Entities, being the proposal technically viable and recommending the Board of Directors of the BCB to approve it.

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That Report BCB-GAL-SANO-DLBCI-INF-2024-436 issued by the GAL concludes that the proposal for the Regulation on the Establishment of Complementary Reserves of Financial Intermediation Entities from APEC, GEF, and GOM in Report BCB-APEC-SADBC-INF-2024-100, has the object of maintaining liquidity at adequate levels, including preventive mechanisms of a prudential nature, therefore it is legally viable for its approval by the Board of Directors of the Issuing Entity through the issuance of an express Resolution.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the Regulation on the Establishment of Complementary Reserves of Financial Intermediation Entities in its seven (7) Articles, which as an Annex forms an integral part of this Resolution.

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

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

La Paz, October 15, 2024.

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

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ANNEX

REGULATION ON THE ESTABLISHMENT OF COMPLEMENTARY RESERVES OF FINANCIAL INTERMEDIATION ENTITIES

Article 1.- (Object)

This regulation has the object of establishing the constitution of Complementary Reserves as a Legal Reserve of mandatory compliance by Financial Intermediation Entities (EIF).

Article 2.- (Definition)

The Complementary Reserves of EIFs are defined as immobilized resources coming from the excess of Legal Reserve that exceed a liquidity level considered adequate, equivalent to 5% of obligations with the public, with public companies, and with companies with state participation in national currency of EIFs as of September 30, 2024. The Required and Constituted Legal Reserve is defined in the Regulation on Legal Reserves for Financial Intermediation Entities.

Article 3.- (Characteristics)

I. The Complementary Reserves of each EIF are the positive difference between the excess of Legal Reserve and the adequate reserve level.

The excess of Legal Reserve is the difference between the Constituted Legal Reserve and the Required Legal Reserve in cash.

II. To define the immobilized amount, the excess of Legal Reserve considered is the arithmetic mean of the daily reserve excess of the month of September 2024.

III. Complementary Reserves will be constituted only with resources in national currency (NC) in a fund administered by the BCB.

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Article 4.- (Term)

Complementary Reserves will be constituted on October 18, 2024, with a validity of 175 calendar days considering daily balance information as of September 30, 2024.

Article 5.- (Investment of Complementary Reserves)

The resources of the Complementary Reserves will be invested in redeemable securities of the BCB which will generate a yield of 0.50% annually. The yields will be distributed proportionally to the balances maintained in Complementary Reserves of each EIF. The administration of these investments will not be subject to any commission.

Article 6.- (Exceptions)

All EIFs whose balance of obligations with the public, public companies, and companies with state participation in National Currency as of September 30, 2024, is less than 4% of said total obligations of the financial system in National Currency are exempt from Complementary Reserves.

Article 7.- (Return of Resources)

At the request of the EIF, through a note addressed to the General Manager of the BCB justifying its request, the partial or total return of the resources of the Complementary Reserves will be made. The justifications must be framed in the following aspects: use of resources for portfolio growth, increase in financial investments, or decrease in liabilities.