Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 141/2021

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

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).
• The BCB Statute, approved by Board Resolution No. 128/2005 of October 21, 2005, and its modifications.
• The Legal Reserve Regulation for Financial Intermediation Entities, approved by Board Resolution No. 018/2020 of February 18, 2020, and its modifications.
• Report BCB-APEC-SIE-INF-2021-72 of November 26, 2021, from the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2021-229 of November 26, 2021, from the Legal Affairs Management (GAL).

CONSIDERING:

That the Political Constitution of the State in its article 327 establishes that 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 Law No. 1670 of the Central Bank of Bolivia, in its article 7, provides 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 Bank's Board of Directors, by an absolute majority of votes.

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That Law No. 1670 of the Central Bank of Bolivia, in its article 8, states that the reserve and deposits constituted at the BCB by banks and financial entities shall not be subject to any type of seizure or retention by third parties.

That Law No. 1670 of the Central Bank of Bolivia, in its article 37, establishes that the BCB shall be the custodian of the liquid reserves intended to cover the legal reserve and attend to the payment system and other operations with the BCB of the financial intermediation entities subject to the authorization and control of the Financial System Supervision Authority.

That article 44 of Law No. 1670 of the Central Bank of Bolivia 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 norms; as well as establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs.

That subsections a) and i) of article 54 of Law No. 1670 of the Central Bank of Bolivia indicate as attributes of the BCB Board of Directors to issue norms and adopt general decisions that are necessary for the Issuing Entity to fulfill the functions, competencies, and powers assigned to it by Law; and to fix and regulate the administration of the legal reserve to which banks and other financial entities must be subject, establishing measures for its compliance.

That the BCB Statute determines in numerals 1) and 7) of its article 11 that the Board of Directors of the Issuing Entity has the attributes to approve general decisions and issue 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.

That article 26 of the BCB Statute stipulates that the Board of Directors pronounces itself on matters within its competence through resolutions. It may also do so through decisions that shall be expressly recorded in the minutes. Likewise, every draft Board resolution must be motivated and justified by a technical report from the Management or Managements to whom 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 in article 1, of the “Legal Reserve Regulation for Financial Intermediation Entities,” it is provided that all Financial Intermediation Entities (FIEs), authorized

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for their operation by the Financial System Supervision Authority – ASFI, are subject to the provisions of the aforementioned Regulation.

That through Technical Report BCB-APEC-SIE-INF-2021-72, the APEC and GEF submit to the Board of Directors the modification of the “Legal Reserve Regulation for Financial Intermediation Entities,” with the objective of maintaining the expansionary orientation of monetary policy and safeguarding the liquidity of the FIEs. Likewise, it recommends to the BCB Board of Directors the modification of the Legal Reserve Regulation for FIEs for the extension of the validity of the CPVIS III fund and the maximum date for requesting liquidity loans guaranteed with the aforementioned fund.

That through Legal Report BCB-GAL-SANO-DLBCI-INF-2021-229, the GAL concludes that the modification of the “Legal Reserve Regulation for Financial Intermediation Entities,” proposed by the APEC and GEF does not contravene the current legal framework, therefore it is legally procedent, being the competence of the BCB Board of Directors its approval by an absolute majority of votes, in accordance with what is established in article 7 of Law No. 1670 and numeral 7) of article 11 of its Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the modification of numerals 1), 2), and 8) of Article 32 (Liquidity Loans in National Currency with Guarantee of the Fund for Credits destined to the Productive Sector and Social Interest Housing III), extending the validity of the CPVIS III Fund and the date of returning participation to each FIE, under the conditions established in the regulation, until January 31, 2023, and the maximum date for applying for liquidity loans to the BCB until January 3, 2023.

Article 2.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, November 30, 2021

Roger Edwin Rojas Ulo PRESIDENT a.i.

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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.