BOARD OF DIRECTORS

BOARD RESOLUTION NO. 162/2024

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

VIEWED:

• The Political Constitution of the State 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-2024-105 of November 22, 2024, from the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2024-490 of November 26, 2024, 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.

---

//2. B.D. No. 162/2024

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 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 3 provides that the BCB, within the framework of the present 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. 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 Supervisory Authority of the Financial System (ASFI), with the reserve and deposits constituted at the BCB by banks and financial entities not being subject to any type of 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 to attend to the payment system and other operations with the BCB of Financial Intermediation Entities (EIFs) subject to the authorization and control of the Supervisory Authority of the Financial System (ASFI).

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

---

//4. B.D. No. 162/2024

It may also do so through decisions that shall 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 whom the subject matter of 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 Legal Reserve Regulation for EIFs 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 EIFs, authorized for their operation by the Supervisory Authority of the Financial System (ASFI), are subject to the provisions of the Regulation.

That the APEC and GEF, through report BCB-APEC-SADBC-INF-2024-105, conclude and recommend to the Board of Directors of the BCB the approval of the modifications to the Legal Reserve Regulation referred to Funds in Custody in MN and MNUFV, with the objective of giving continuity to the orientation of monetary policy and preserving the stability of the financial system.

That the GAL, through report BCB-GAL-SANO-DLBCI-INF-2024-490, concludes that the proposal to modify Article 16 of the Legal Reserve Regulation for EIFs, approved by Board Resolution No. 076/2022 and its modifications, which has the object of modifying the Custody Funds from 60% to 40% in the Legal Reserve requirements in MN of Multiple Banks and the Public Bank, is a measure that falls within the existing legal framework. For all the above, it recommends to the Board of Directors of the BCB to consider its approval.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

---

//3. B.D. No. 162/2024

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 norms and adopt general decisions that are necessary for the Issuing 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 shall 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 426 of Law No. 393 determines that EIFs must ensure that at all times and under different alternative scenarios, 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, EIFs will plan a prudent management of their assets and liabilities, foreseeing that cash inflows bear a relationship to expected outflows. The level of liquidity 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 Article 6 of the Statute of the BCB establishes that the norms issued by the BCB will be approved through Resolutions of its Board of Directors.

That subsections 1), 7), and 30) of Article 10 of the Statute of the BCB determine that the Board of Directors of the Issuing Entity has the attributions to approve general decisions and issue 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, in accordance with the Regulation, and to approve, modify, and interpret the Regulations of the BCB.

That Articles 24 and 26 of the aforementioned Statute refer 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, and the Board of Directors pronounces itself on matters within its competence through Resolutions.

---

//5. B.D. No. 162/2024

Article 1.- Modify Article 16 (Funds in custody) of the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

"Article 16 (Funds in custody). Multiple Banks and the Public Bank may maintain up to 40% of their Legal Reserve requirement in cash in MN and MNUFV in Funds in Custody in any location; other EIFs may maintain up to 60%. Any excess that EIFs maintain above the respective percentages will not be recognized for reserve purposes. EIFs must maintain 10% of their Legal Reserve requirement in Cash in ME and MVDOL in Funds in Custody in any location. Any excess that EIFs maintain above this percentage will not be recognized for reserve purposes. The global deficiency in Funds in Custody in ME and MVDOL cannot be compensated with excesses of reserve 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 December 3, 2024.

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

La Paz, November 27, 2024

SIGNED. ROGER EDWIN ROJAS ULO, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert, Miguel Angel Marañón Urquidi, Víctor Gonzalo Calisaya Gomez.