Board Resolution No. 164/2013

RESOLUTION OF THE BOARD OF DIRECTORS NO. 164/2013

SUBJECT: ADVISORY ON ECONOMIC POLICY AND MANAGEMENT OF FINANCIAL ENTITIES - APPROVE MODIFICATION TO THE LEGAL RESERVE REGULATION

HAVING SEEN:

The Political Constitution of the State promulgated on February 7, 2009.

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

The Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005 and its subsequent modifications.

The Legal Reserve Regulation approved by Board Resolution No. 070/2009 of June 23, 2009 and modified according to Board Resolutions No. 130/2010 of November 23, 2010, No. 007/2011 of January 18, 2011, No. 072/2011 of June 14, 2011, No. 07/2012 of January 10, 2012 and No. 042/2012 of April 10, 2012.

Resolution of the Financial System Authority ASFI No. 687/2013 of October 16, 2013.

The Report of the Advisory on Economic Policy and Management of Financial Entities BCB-APEC-SSIEE-INF-2013-71 of November 21, 2013.

The Report of the Legal Affairs Management BCB-GAL-SANO-INF-2013-413 of November 22, 2013.

CONSIDERING:

That the Political Constitution of the State in its article 328 provides that the BCB is authorized, in coordination with the economic policy determined by the Executive Branch, to determine and execute monetary policy.

That Law No. 1670 in its article 7 provides that the Issuing Entity may establish legal reserves of mandatory compliance for financial intermediation entities and, for this purpose, determine their composition, amount, method of calculation, characteristics, and remuneration.

That in its article 37, the aforementioned legal norm establishes that the BCB is the custodian of the liquid reserves intended to cover said reserve and may delegate the custody of these deposits according to the specific regulation that the BCB Statute in article 11

The financial entities included in article 1 of this Regulation must constitute legal reserve in cash and in securities on the liabilities registered in the accounts detailed below:

Obligations with the public and with state-participated companies on demand

• Current account deposits

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numeral 7), states that it is the faculty of the Board to establish by 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 according to Regulation.

That the Legal Reserve Regulation aims to establish the technical and operational conditions of mandatory compliance for financial entities that are duly authorized for their operation by the Financial System Supervision Authority, regarding the constitution and form of administration of the legal reserve.

That the Main Advisory on Economic Policy and the Management of Financial Entities through Report BCB-APEC-SSIEE-INF-2013-71 recommend the approval of the modification of articles 3 and 5 of the Legal Reserve Regulation.

That according to Report BCB-GAL-SANO-INF-2013-413, the Legal Affairs Management concludes that the proposed modification is legally appropriate since it does not contravene the current legal framework, being the competence of the BCB Board to consider its approval by two-thirds of the votes of all its members in accordance with what is provided in article 54 subsection o) of Law No. 1670.

That, the BCB Board in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized regulations of general application and internal rules, being authorized to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies and faculties assigned by Law to the Issuing Entity, as established in articles 44 and 54 inc. o) of Law No. 1670 and articles 9, 11 and 24 of the BCB Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the modification of Article 3 (On-demand obligations, savings accounts and term accounts subject to legal reserve) of the Legal Reserve Regulation in the following manner:

SAYS (ARTICLE 3):

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• Inactive current accounts
• Demand deposits
• Certified checks
• Drafts and transfers payable
• Collections to be reimbursed
• Matured values
• Fiduciary deposits in current account
• Fiduciary demand deposits

Obligations with the public and with state-participated companies for savings accounts

• Savings account deposits
• Savings account deposits closed due to inactivity
• Obligations with participants in savings plans
• Fiduciary deposits in savings accounts

Obligations with the public and with state-participated companies at term

• Term obligations
• Fixed-term obligations with account annotation

Obligations with the public restricted

• Closed current accounts
• Savings account deposits affected as collateral
• Term deposits affected as collateral
• Fixed-term deposits with account annotation restricted

Other accounts payable

• Management checks

Obligations with banks and financing entities

• Current account deposits of national financial entities subject to reserve
• Other on-demand obligations with national financial entities subject to reserve
• Financing from foreign entities on demand
• Head office and branches on demand
• Foreign banks and correspondents on demand
• Savings account deposits of national financial entities subject to reserve
• Fixed-term deposits of national financial entities subject to reserve
• Fixed-term deposits of national financial entities with account annotation subject to reserve

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Obligations with the public and with state-participated companies for savings accounts

• Savings account deposits

• Savings account deposits closed due to inactivity

• Interbank operations

Financing from foreign entities at short-term for free availability

• Financing from foreign entities at short-term for foreign trade operations
• Head office and branches at short-term for free availability

Head office and branches at short-term for foreign trade operations

Other Obligations with the public and with state-participated companies:

• Judicial deposits
• Third-party funds for operations in the Stock Market
• Third-party funds for stock market operations
• Funds to be delivered to third parties for the placement of securities
• Other on-demand obligations with the public
• Judicial withholdings
• Prepaid letter of credit guarantee deposits
• Other guarantee deposits
• Other restricted obligations with the public
• Advance collections from credit card customers

SHOULD SAY:

"The financial entities included in article 1 of this Regulation must constitute legal reserve in cash and in securities on the liabilities registered in the accounts detailed below:

Obligations with the public and with state-participated companies on demand

• Current account deposits
• Inactive current accounts
• Demand deposits
• Certified checks
• Drafts and transfers payable
• Collections to be reimbursed
• Matured values
• Fiduciary deposits in current account
• Fiduciary demand deposits

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• Obligations with participants in savings plans
• Fiduciary deposits in savings accounts

Obligations with the public and with state-participated companies at fixed term

• Term obligations
• Fixed-term obligations with account annotation

Obligations with the public and with state-participated companies restricted

• Closed current accounts
• Savings account deposits affected as collateral
• Term deposits affected as collateral
• Fixed-term deposits with account annotation restricted

Other accounts payable

• Management checks

Obligations with banks and financing entities

• Current account deposits of national financial entities subject to reserve
• Other on-demand obligations with national financial entities subject to reserve
• Financing from foreign entities on demand
• Head office and branches on demand
• Foreign banks and correspondents on demand
• Savings account deposits of national financial entities subject to reserve
• Fixed-term deposits of national financial entities subject to reserve
• Fixed-term deposits of national financial entities with account annotation subject to reserve
• Interbank operations

Financing from foreign entities at short-term for free availability

Financing from foreign entities at short-term for foreign trade operations

Head office and branches at short-term for free availability

Head office and branches at short-term for foreign trade operations

Other obligations with the public, with state-participated companies and with banks and financing entities:

• Judicial deposits
• Third-party funds for operations in the Stock Market
• Third-party funds for stock market operations
• Funds to be delivered to third parties for the placement of securities
• Mobile wallet payment account

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Prepaid card account

• Other on-demand obligations with the public
• Judicial withholdings
• Prepaid letter of credit guarantee deposits
• Other guarantee deposits
• Other restricted obligations with the public
• Obligations with banks and other financial entities restricted
• Advance collections from credit card customers" subject to legal reserve

Article 2.- Approve the modification to Article 5 (Legal reserve rates) of the Legal Reserve Regulation in the following manner:

SAYS (ARTICLE 5):

The legal reserve rates on the liabilities detailed in article 3 of this Regulation are as follows:

In NC and NCUFV: Two percent (2%) for cash reserve Ten percent (10%) for securities reserve

In FC and MVDOL: Thirteen point five percent (13.5%) for cash reserve. Eight percent (8%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on the accounts included in "Other Obligations with the public and with state-participated companies" indicated in article 3 of this Regulation.

SHOULD SAY:

"The legal reserve rates on the liabilities detailed in article 3 of this Regulation are as follows:

In NC and NCUFV:

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Thirteen point five percent (13.5%) for cash reserve. Eight percent (8%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on the accounts included in "Other Obligations with the public, with state-participated companies and with banks and financing entities" indicated in article 3 of this Regulation."

Article 3.- This partial modification of the Legal Reserve Regulation will enter into force from its approval.

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

La Paz, November 26, 2013