Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 164/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT - AMENDS THE OPEN MARKET OPERATIONS REGULATION

VISTOS:

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.
The BCB Statute approved by Board Resolution (B.R.) No. 128/2005 of October 21, 2005 and its subsequent modifications.
The Open Market Operations (OMO) Regulation, approved by Board Resolution No. 149/2015 of August 25, 2015.
The Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation, approved by Board Resolution No. 150/2015 of August 25, 2015.
Act 46/2014 of the Open Market Operations Committee (COMA), of November 12, 2014.
Report BCB-GOM-SOMA-INF-2015-49 of September 1, 2015, from the Monetary Operations Management.
Report BCB-GAL-SANO-INF-2015-349 of September 1, 2015, from the Legal Affairs Management.

CONSIDERING:

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 in accordance with its monetary program, being able to issue, place, and acquire securities and carry out other open market operations for this purpose.
That in virtue of the powers 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 Statute, 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 issuances by the BCB and by the TGN are exempt from the public offering authorization by the Superintendence of Pensions, Securities, and Insurance (SPVS), their own legal norms being sufficient to support their issuance and public offering.
That the Open Market Operations (OMO) Regulation, approved by Board Resolution No. 149/2015, in its Article 4 states that "The BCB Board of Directors defines monetary policies in general and open market operations policies in particular"; and in Article 13 establishes that "OMOs may be carried out through operational mechanisms authorized by the BCB Board of Directors,...".
That said OMO Regulation in item II of Article 14 states that operations in the secondary market may be carried out with securities from private issuers expressly authorized by the BCB Board of Directors.
That the Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation, approved by Board Resolution No. 150/2015, in its Article 6 states that "It is the competence of the COMA, in addition to those established in Article 53 of the BCB Statute: (...) c) Define the form of issuance, the cut-off rates or prices, the quantities offered, the terms, the currencies, the minimum and/or maximum amounts, and other characteristics of the securities for operations authorized by the Board."
That Act 46/2014 of the Open Market Operations Committee (COMA) instructs the carrying out of procedures for the contracting of a Stock Agency to carry out operations on behalf of the Central Bank of Bolivia (BCB) at the Bolivian Stock Exchange S.A. (BBV).
That Report BCB-GOM-SOMA-INF-2015-49 from the Monetary Operations Management recommends to the BCB Board of Directors approve the mechanism for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Stock Agency, in order to provide the BCB with an attractive alternative to inject liquidity, which accompanies the set of monetary regulation measures executed and, consequently, the modification of Article 13 of the Open Market Operations Regulation.
That Report BCB-GAL-SANO-INF-2015-349 from the Legal Affairs Management establishes that there is no legal impediment for the BCB Board of Directors to approve the mechanism for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Stock Agency, as well as its respective regulation.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

//3. B.R. No. 164/2015

Article 1.- Modify Article 13 of the Open Market Operations Regulation in the following terms:

SAYS:

Article 13 (Operational Mechanisms).-

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

(...)

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

MUST SAY:

"Article 13 (Operational Mechanisms).-

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

(...)

VI. Purchase of Public and/or Private Securities in the Secondary Market of the BBV through a Stock 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 expansionary monetary policy is required.

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

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

La Paz, September 1, 2015

Marcelo Zabalaga Estrada

//4. B.R. No. 164/2015

Reynaldo Yujra Segales
Álvaro Rodríguez Rojas
Abraham Pérez Alandia
Ronald Polo Rivero
Sergio Velarde Vera

Board Resolution No. 164/2015