BOARD

BOARD RESOLUTION NO. 153/2023

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

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. 393 of August 21, 2013, on Financial Services and its modifications.
• 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-SADBC-INF-2023-102 of November 24, 2023, issued by the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2023-390 of November 27, 2023, 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 attributes to Determine and execute monetary policy.

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That Article 1 of Law No. 1670 on the BCB, modified by Article 67, section A3, item 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, autarkic in 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 normative faculties of general application.

That Article 2 of Law No. 1670 establishes that the object of the BCB is to procure 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 for the fulfillment of 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 Financial System Supervision Authority.

That Article 8 of Law No. 1670 states that the reserve and 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 attend the payment system and other operations with the BCB of EIFs subject to the authorization and control of the Financial System Supervision Authority.

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 normative rules of general application, and internal rules; as well as establishing administrative, operational, and financial strategies of the Issuer Entity, approving their respective short and medium-term programs.

That subsections a), i), and o) of Article 54 of Law No. 1670 indicate as attributes of the BCB Board to issue norms and adopt general decisions that were

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necessary for the Issuer Entity to fulfill the functions, competencies, and faculties assigned by the 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 provides that the BCB may grant liquidity credits to financial intermediation entities with the guarantee of the legal reserve constituted, as well as with other guarantees determined by the Issuer Entity, according to a regulation approved by its Board.

That items 1), 7), and 30) of Article 10 of the BCB Statute determine that the Board of the Issuer Entity has the attributes to approve general decisions and issue the norms that are necessary for the BCB to fulfill the functions, competencies, and faculties assigned to it by the 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, according to Regulation and to approve, modify, and interpret the Regulations of the BCB.

That Article 24 of the BCB Statute 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 Article 26 of the Issuer Entity's Statute stipulates that the Board pronounces on matters within its competence through resolutions. It may also do so through decisions that will be expressly recorded in the minutes.

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 their operation by the

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Financial System Supervision Authority ASFI, are subject to the provisions of this Regulation.

That Report BCB-APEC-SADBC-INF-2023-102, issued by APEC and GEF, justifies the modification, stating that there is a need to implement measures by the BCB as the Monetary Authority, thereby generating an environment of certainty that allows maintaining the dynamism of new credits that are intended to support productive projects that contribute to the economic and social development of the country; recommending to the BCB Board to approve the modifications to the Legal Reserve Regulation for EIFs with the objective of supporting the productive sector.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2023-390, concludes that the modification of the Legal Reserve Regulation for EIFs, proposed by APEC and GEF, has the object of modifying Articles 41 and 42, through which it is intended to extend the validity of the CPRO Fund to allow EIFs to maintain the dynamism of new credits granted that are intended to support productive projects and investment plans that contribute to the economic and social development of the country, generating an environment of certainty in the Financial System, which comply with the guidelines of legal provisions and do not contravene the current legal framework, therefore recommending to the BCB Board its approval.

THEREFORE,

THE BOARD OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- 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 Fund-NM) with the available resources resulting from the modification of the Legal Reserve rate on NM-MNUFV Bonds effective as of January 10, 2022, and the modification of the Legal Reserve rate on NM-UFV Bonds effective as of December 12, 2022; and in foreign currency (CPRO Fund-FC) with the available resources resulting from the modification of the Legal Reserve rate on FC-MVDOL Bonds effective as of January 10, 2022, and the modification of the Legal Reserve rate on FC-MVDOL Bonds effective as of December 12, 2022; in addition to the voluntary contributions of EIFs in FC and deposited in the BCB account at its correspondent bank abroad, made from January 18, 2022, to December 30, 2024.

Likewise, it will be constituted in foreign currency (CPRO Fund-FC) with seventy percent (70%) of the resources of the FIUSEER-FC; that are not guaranteeing liquidity loans with the BCB as of April 3, 2023, and seventy-five percent (75%) of the resources of the FIUSEER-FC, that are not guaranteeing liquidity loans with the BCB as of April 24, 2023. It will be constituted in national currency (CPRO Fund-NM) by ninety-five percent (95%) of the resources of the FIUSEER-NM, that are not guaranteeing liquidity loans with the BCB as of April 24, 2023.

The validity of this fund will be until March 31, 2026. The resources of each EIF in the fund will be returned by the BCB upon the expiration of the fund according to what is provided in item 9 of Article 42.

EIFs may request the BCB for the partial or total return of their participation in the CPRO-FC that is not guaranteeing liquidity loans in NM, for their sale to the BCB according to what is established in the Exchange Operations Regulation.”

Article 2.- Modify Article 42 (Loans in NM with Guarantee of the Fund for Credits destined to the Productive Sector) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

“Article 42 (Loans in NM with Guarantee of the Fund for Credits destined to the Productive Sector). The resources of each participant in the CPRO Fund will serve as guarantee for the loans in NM that they request from the BCB, under the following conditions:

1. EIFs may request loans in NM from the BCB at an interest rate of 0%. These loans will have the following purpose according to the type of entity:

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a. In the case of banks, the loans guaranteed with the CPRO Fund will have the purpose of increasing their loan portfolio in NM destined to the productive sector.

b. In the case of EFVs, the loans guaranteed with the CPRO Fund will have the purpose of increasing their social housing loan portfolio.

c. In the case of CACs and IFDs, the loans guaranteed with the CPRO Fund must be destined to their loan portfolio in NM, with a participation of the productive sector not less than 50%.

2. Loans may be requested until December 30, 2024. The extension of the loan request period will be reviewed annually by the BCB.

3. The maximum amount of accumulated loans will be the participation amount of each EIF in the CPRO Fund, equivalent in NM to the prevailing buying exchange rate. Loans will have a maturity date of March 31, 2026.

4. Monthly, the BCB will compare the amount of loans granted to each EIF with the guarantee of its participation in the CPRO Fund, with the increase in the balance of credits disbursed by said entities in NM with respect to December 31, 2021, as established in item 1 of this article. If the increase is less than the accumulated loans granted by the BCB, the difference will pay the prevailing NM repo interest rate on the date of evaluation of each end of month, from said date until the entity has remedied that difference.

5. For the purposes of the comparison indicated in item 4 of this article, EIFs with loans guaranteed with the CPRO Fund must send to the BCB and the ASFI, as a sworn declaration, through the mechanism communicated via External Circular, information on their credits, as established in item 1 of this article. The cut-off will be made at the end of each month, until the fifth business day of the following month. The included information must not consider credits reported in other sworn declarations (CPVIS III Funds, CAPROSEN, and FIUSEER).

6. In case an EIF needs to demonstrate compliance with the portfolio increase on a date other than the end of the month to remedy the difference indicated in item 4 of this article, it must send this information to the BCB, as

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a sworn declaration, within a maximum period of five business days after the portfolio increase is met.

7. In case the EIF with loans guaranteed with the CPRO Fund does not submit the information cited in the previous items within the established deadlines, the BCB will communicate the non-compliance to the ASFI so that this authority applies the corresponding fines or sanctions.

8. Credits destined to the productive sector will be understood as credit operations established in item 7 of Article 33 of this Regulation.

9. On March 31, 2026, the BCB will return to EIFs, in NM and FC respectively, their participation in the CPRO-Fund-NM and CPRO-Fund-FC, prior to the cancellation of their loans in NM with guarantee of the fund. In the case that an EIF does not have sufficient resources in its current or reserve account in NM to pay its loans, the BCB may offset the difference with its participation in the CPRO-Fund-NM, and in case of insufficiency of this Fund, it will offset the balance with the CPRO-Fund-FC at the prevailing buying exchange rate. The return of voluntary contributions, at the request of EIFs, will be made in the EIFs' accounts abroad. In case the EIF does not have its own account abroad, the EIF will communicate in writing to the BCB the account to which the return will be credited. In both cases, the BCB will not charge the Commission for transfer of funds abroad for the financial system, established in the “Table of Commissions for BCB Services”.

10. The validity of the CPRO Fund may be extended to the extent that the BCB considers pertinent.”

Article 3.- The modifications to the Legal Reserve Regulation for Financial Intermediation Entities will enter into force from the publication of this Resolution.

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, November 28, 2023

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