Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 138/2021

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVAL OF MODIFICATIONS TO THE OPEN MARKET OPERATIONS REGULATION

VISTOS:

• The Political Constitution of the State, of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 1834 of March 31, 1998, on the Securities Market.
• Law No. 393 of August 21, 2013, on Financial Services.
• The Statutes of the BCB, approved by Board Resolution No. 128/2005 of October 21, 2005, and its modifications.
• The Open Market Operations (OMA) Regulation, approved by Board Resolution No. 149/2015 of August 25, 2015, and its modifications.
• Report BCB-GOM-SOMA-INF-2021-102 of November 24, 2021, from the Monetary Operations Management.
• Report BCB-GAL-SANO-DLBCI-INF-2021-227 of November 24, 2021, from the Legal Affairs Management.

CONSIDERING:

That the Political Constitution of the State in Article 326 establishes that the State, through the Executive Branch, will determine the objectives of the country's monetary and exchange rate policy, in coordination with the BCB.

That Article 327 determines 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 in its Article 328 it establishes that the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by law, are: 1. Determine and execute monetary policy, 2. Execute exchange rate policy, 3. Regulate the payment system, 4. Authorize the issuance of currency, and 5. Administer international reserves.

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That Article 6 of Law No. 1670 empowers the BCB to execute monetary policy and regulate the quantity of money and the volume of credit according to its monetary program, being able to emit, place, and acquire securities and carry out other open market operations for this purpose.

That Article 44 determines 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 establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs.

That in virtue of the attributions conferred by subsections a), d), and o) of Article 54 of Law No. 1670 and items 1), 4), and 29) of Article 11 of the BCB Statutes, the BCB Board of Directors is empowered to issue norms and adopt general decisions so that the BCB fulfills the functions, competencies, and powers assigned by Law, as well as to issue norms for the open market operations carried out by the BCB and approve the BCB Regulations, by two-thirds of the votes of all its members.

That Article 7 of Law No. 1834 establishes that both the issuances of Securities of the BCB, as well as of the General Treasury of the Nation (TGN), are exempt from public offering authorization, being sufficient their own legal norms, which back their issuance and public offering.

That, the Law No. 393 of Financial Services, in paragraph III of Article 5, provides that the BCB shall be governed by its own provisions.

That the BCB Statutes, in items 1), 4), and 29) of Article 11, determine as attributions of the Board of Directors: 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; define the policies of the BCB, specialized regulations of general application, and internal rules; in addition to approving, modifying, and interpreting the Statutes 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 26 of the BCB Statutes establishes that the Board of Directors pronounces on matters within its competence through resolutions.

That Article 4 of the OMA Regulation states that the BCB Board of Directors defines monetary policies in general and open market operations policies in particular. Likewise, in Article 13, the operating mechanisms authorized by the BCB Board of Directors are established, and in Article 16, the requirements to participate in the sales mechanisms to natural persons.

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That the Report BCB-GOM-SOMA-INF-2021-102 from the Monetary Operations Management recommends to the BCB Board of Directors the enabling of the sale of securities for direct sale through the BCB's customer service platform and through electronic means, and therefore the approval of the modifications to Articles 13 and 16 of the Open Market Operations Regulation.

That the Report BCB-GAL-SANO-DLBCI-INF-2021-227 from the Legal Affairs Management concludes that the proposal to modify the Open Market Operations Regulation Approved by Board Resolution No. 149/2015 of August 25, 2015, and its modifications, as well as to render ineffective Articles 1) and 2) of Board Resolution No. 093/2021 of July 27, 2021, proposed by the GOM, does not contravene the current legal framework, therefore it is legally procedent, being the competence of the BCB Board of Directors its approval by two-thirds of the votes, in accordance with what is established in subsections a) and o) of Article 54 of Law No. 1670 of the BCB and in items 4 and 29 of Article 11 of the BCB Statutes.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the modification of Article 13 of the Open Market Operations Regulation, in the following terms.

Says:

Article 13 (Operating Mechanisms).-

OMAs may be carried out through operating mechanisms authorized by the BCB Board of Directors, among which are:

I. Public Auction. It is a competitive mechanism for the allocation of securities, issued by the BCB or the TGN, to authorized institutions. Allocation in auction may be carried out under the modality of explicit proposals (competitive auction) or another modality defined by the COMA with the approval of the Monetary and Exchange Rate Policy Committee.

II. Money Market. It is a mechanism through which the GOM carries out purchase, sale, repo, or other operations with public securities issued by the TGN or the BCB, with authorized institutions. In the money market, economic agents also have the possibility to redeem their public securities in advance and carry out operations and transactions with securities, under the conditions determined by the COMA.

III. Sale through Placement Agents. It is a mechanism through which authorized financial entities receive securities from the BCB to then sell them to natural persons. The conditions of this mechanism will be defined through a specific Regulation approved by the BCB Board of Directors.

The characteristics of the securities, the prices, the quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA.

The cost for Record Maintenance in the EDV of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

IV. Purchase of Public and/or Private Securities in the Secondary Market of the BBV through a Brokerage Agency. It is a mechanism by which the BCB can acquire securities issued by the TGN or the BCB, or securities from private issuers, with the objective of injecting liquidity in situations where an expansionary monetary policy is required.

V. Other Mechanisms. The BCB Board of Directors may authorize the execution of OMAs with mechanisms different from those previously established.

Must Say:

Article 13 (Operating Mechanisms).-

OMAs may be carried out through operating mechanisms authorized by the BCB Board of Directors, among which are:

I. Public Auction. It is a competitive mechanism for the allocation of securities, issued by the BCB or the TGN, to authorized institutions. Allocation in auction may be carried out under the modality of explicit proposals (competitive auction) or another modality defined by the COMA with the approval of the Monetary and Exchange Rate Policy Committee.

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II. Money Market. It is a mechanism through which the GOM carries out purchase, sale, repo, or other operations with public securities issued by the TGN or the BCB, with authorized institutions. In the money market, economic agents also have the possibility to redeem their public securities in advance and carry out operations and transactions with securities, under the conditions determined by the COMA.

III. Sale through Placement Agents. It is a mechanism through which authorized financial entities receive securities from the BCB to then sell them to natural persons. The conditions of this mechanism will be defined through a specific Regulation approved by the BCB Board of Directors.

The characteristics of the securities, the prices, the quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA.

The cost for Record Maintenance in the EDV of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

IV. Purchase of Public and/or Private Securities in the Secondary Market of the BBV through a Brokerage Agency. It is a mechanism by which the BCB can acquire securities issued by the TGN or the BCB, or securities from private issuers, with the objective of injecting liquidity in situations where an expansionary monetary policy is required.

V. Direct Sale to Natural Persons. It is a mechanism for the direct placement of securities to natural persons. The characteristics of the securities, the prices, the quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA.

The cost for Record Maintenance in the Bolivian Securities Depository Entity S.A. (EDV) of the dematerialized securities placed through this mechanism will be assumed by the BCB.

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BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

VI. Direct sale of securities to natural persons through electronic means. It is a mechanism for the placement of BCB securities to natural persons through electronic means. The conditions of this mechanism will be defined through a specific Regulation approved by the BCB Board of Directors.

The cost of Record Maintenance in the EDV of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

VII. Other Mechanisms. The BCB Board of Directors may authorize the execution of OMAs with mechanisms different from those previously established.

Article 2.- Approve the modification of Article 16 of the Open Market Operations Regulation, in the following terms.

Says:

Article 16 (Requirements to participate in the sale through placement agents).- Any natural person in the country over 18 years of age or minors in joint operations with a person over 18 years of age may participate. To participate in this mechanism, natural persons must prove their identity with some valid document issued in the country.

Must Say:

Article 16 (Participation Requirements).-

I. Any natural person over 18 years of age proving identity with some valid document issued in the country may participate in the mechanisms described in paragraphs III, V, and VI of Article 13.

II. Minors may participate in joint operations with a person over 18 years of age, having to prove their identity with some valid document issued in the country.

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Article 3.- Render ineffective Articles 1 and 2 of Board Resolution No. 093/2021 of July 27, 2021, which approves modifications to the Open Market Operations Regulation.

Article 4.- This Resolution will enter into force from its approval.

Article 5.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.

La Paz, November 25, 2021

Roger Edwin Rojas Ulo PRESIDENT a.i.

Oscar Ferrufino Morro VICEPRESIDENT a.i.

Gabriel Herbas Camacho DIRECTOR a.i.

Gumerindo Héctor Pino Guzmán DIRECTOR a.i.

Diego Alejandro Pérez Cueto Eulert DIRECTOR a.i.