Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 174/2016

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT APPROVE MODIFICATION TO THE FOREIGN EXCHANGE POSITION REGULATION

VIEWED:

• 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 Foreign Exchange Position Regulation approved by Board Resolution No. 108/2016 of June 14, 2016.
• The Report from the Economic Policy Advisory and Financial Entities Management BCB-APEC-SIE-INF-2016-72 of August 26, 2016.
• The Report from the Legal Affairs Management BCB-GAL-SANO-DLBCI-INF-2016-223 of August 26, 2016.

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 and execute exchange rate policy.
• That the BCB, in compliance with what is provided in article 19 of Law No. 1670, has established a Foreign Exchange Position Regulation of mandatory compliance by Institutions of the Financial System.
• That article 11 numeral 12) of the BCB Statute establishes that the Board of the Issuing Entity has the authority to determine the exchange rate regime and the country's exchange rate policy.
• That the Foreign Exchange Position Regulation aims to regulate the foreign exchange position of banking and non-banking financial entities in denominations other than national currency, in order to preserve the stability of the financial system, maintain necessary control over the aggregated active and passive positions of financial institutions, and promote the remonetization of the financial system.
• That the Economic Policy Advisory and the Financial Entities Management, through Report BCB-APEC-SIE-INF-2016-72, recommend the approval of the modification of articles 4 and 8 of the Foreign Exchange Position Regulation.
• That according to Report BCB-GAL-SANO-DLBCI-INF-2016-223, the Legal Affairs Management concludes that the proposed modification is legally appropriate, as it does not contravene the current legal framework, and it is 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 the subsection o) of article 54 of Law No. 1670, consistent with numeral 29) of article 11 of the BCB Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify article 4 of the Foreign Exchange Position Regulation as follows:

IT SAYS: Article 4 (Limits of the Exchange Position).

Financial Intermediation Entities may maintain an exchange position according to the following rules:

a) For the sum of ME, MVDOL, and OME, the limits are as follows:

• A long position up to the equivalent of 60% (SIXTY PERCENT) of the value of accounting equity, from March 16, 2010.
• A short position up to the equivalent of 20% (TWENTY PERCENT) of the value of accounting equity.

b) A long position in MNUFV up to the equivalent of 15% (FIFTEEN PERCENT) of the value of accounting equity, from March 16, 2010.

• A long position in MNUFV up to the equivalent of 10% (TEN PERCENT) of the value of accounting equity, from June 1, 2010.

IT MUST SAY:

“Financial Intermediation Entities may maintain an exchange position according to the following rules:

a) For the sum of ME, MVDOL, and OME, the limits are as follows:

• A long position up to the equivalent of 60% (SIXTY PERCENT) of the value of accounting equity.
• A short position up to the equivalent of 30% (THIRTY PERCENT) of the value of accounting equity.

b) A long position in MNUFV up to the equivalent of 10% (TEN PERCENT) of the value of accounting equity.”

Article 2.- Modify article 8 of the Foreign Exchange Position Regulation as follows:

IT SAYS: Article 8 (Exception).

The Productive Development Bank (BDP) is exempt from the application of this regulation.

IT MUST SAY:

“The Productive Development Bank (BDP) is exempt from the application of this regulation.

Development Financial Institutions (IFD) are exempt from the application of this regulation.”

Article 3.- This partial modification of the Foreign Exchange Position Regulation will enter into force as of September 7, 2016.

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

La Paz, September 6, 2016

Marcelo Zabalaga Estrada

Sergio Velarde Vera Ronald Polo Rivero Abraham Pérez Alandia Luis Baudoin Olea