BOARD OF DIRECTORS

BOARD RESOLUTION NO. 041/2025

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT - MODIFICATION OF THE LEGAL RESERVE REGULATION FOR FINANCIAL INTERMEDIATION ENTITIES.

VIEWED:

• The Political Constitution of the State of February 7, 2009 (CPE).
• 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-2025-17 of March 21, 2025 from the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2025-93 of March 24, 2025 from 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.

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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 attributions to determine and execute Monetary Policy.

That Article 1 of Law No. 1670 on the BCB, modified by Article 67, section A3, numeral 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, of an autarkic nature, of indefinite duration, with its own legal personality and 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 3 of Law No. 1671 provides that the BCB, within the framework of its Law, will formulate policies of general application in monetary, exchange and payment system matters for the fulfillment of its object.

That Articles 7 and 8 of Law No. 1670 determine that the BCB may establish Legal Reserves of mandatory compliance by Banks and Financial Intermediation Entities (EIF). Their composition, amount, method of calculation, characteristics and remuneration, shall be established by the Board of Directors of the Bank, by an absolute majority of votes. The control and supervision of the Legal Reserve shall correspond to the current Authority for the Supervision of the Financial System (ASFI), with the reserve and deposits constituted in the BCB by banks and financial entities not being subject to any type of judicial seizure 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 EIF subject to the authorization and control of the Authority for the Supervision of the Financial System.

That Article 44 of Law No. 1670 provides that the highest authority of the BCB is its Board of Directors, 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.

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That subsections a), i) and o) of Article 54 of Law No. 1670, indicate as attributions of the Board of Directors of the BCB to issue rules and adopt general decisions that were 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 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 426 of Law No. 393 determines that EIF must ensure that at all times and under different alternatives, they have adequate levels of liquidity and sufficient resources to guarantee the continuity of operations and the timely attention of their obligations, considering the complexity and volume of their operations and the risk profile they are assuming. For their part, EIF will plan a prudent management of their assets and liabilities anticipating that cash inflows will bear a relationship to expected outflows. The liquidity level defined by the entity will be based on estimated needs, cash flow projections, deposit concentration levels and the quality and convertibility of assets into cash.

That the Legal Reserve Regulation for EIF 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 aforementioned regulation provides that all EIF, authorized for their operation by the Authority for the Supervision of the Financial System, are subject to the provisions of the Regulation.

That Articles 5 and 6 of the Statute of the BCB establish that the BCB has normative competence, being that the rules it issues will be approved by Resolution of its Board of Directors.

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That subsections 1), 7) and 30) of Article 10 of the Statute of the BCB, determine that the Board of Directors of the Issuer Entity has the attributions to approve general decisions and issue the rules that were 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 Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody and remuneration, in accordance with the Regulation and to approve, modify and interpret the Regulations of the BCB.

That Article 24 refers that Resolutions and decisions of the Board of Directors 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 Statute of the Issuer Entity stipulates that the Board of Directors pronounces itself on matters within its competence through Resolutions. It may also do so through decisions that will 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 which the matter subject to the Resolution corresponds and by a report from the GAL. These reports must be sent to the Board of Directors by the General Management with its recommendation.

That the APEC and GEF through report BCB-APEC-SADBC-INF-2025-17, conclude and recommend the approval of the proposed modification to the Legal Reserve Regulation for Financial Intermediation Entities with the objective of giving continuity to the orientation of monetary policy to reduce liquidity, inflationary pressures and preserve the stability of the financial system.

That the GAL through report BCB-GAL-SANO-DLBCI-INF-2025-93 concludes that the proposal of the APEC and GEF developed in report BCB-APEC-SADBC-INF-2025-17, has as its object the modification of Article 16 of the Legal Reserve Regulation for EIF, approved by Board Resolution No. 076/2022 and its modifications, whose purpose is to modify the Custody Funds from 40% to 20% in the Legal Reserve requirements in MN of Multiple Banks and the Public Bank, is legally viable and does not violate the current legal framework, therefore it recommends to the Board of Directors of the BCB to consider its approval.

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THEREFORE

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Article 16 of the Legal Reserve Regulation for Financial Intermediation Entities approved by Board Resolution No. 076/2022 of August 26, 2022, with the following text:

“Article 16 (Custody Funds). Multiple Banks and the Public Bank may maintain up to 20% of their Legal Reserve requirement in Cash in MN and MNUFV in Custody Funds in any location, the other EIF may maintain up to 60%. Any excess that EIF maintain above the respective percentages will not be recognized for reserve purposes.

EIF must maintain 10% of their Legal Reserve requirement in Cash in ME and MVDOL in Custody Funds in any location. Any excess that EIF maintain above this percentage will not be recognized for reserve purposes. The global deficiency in Custody Funds in ME and MVDOL cannot be offset with excess reserves in BCB accounts or reserve in securities.”

Article 2.- The modifications to the Legal Reserve Regulation for Financial Intermediation Entities will enter into force as of April 8, 2025.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, March 25, 2025

SIGNED. ROGER EDWIN ROJAS ULO, Gumercindo Héctor Pino Guzmán, Miguel Angel Marañón Urquidi, Victor Gonzalo Calisaya Gomez.

“2025 BICENTENARIO OF BOLIVIA”