Circular LISOL 1-333. Minimum liquidity requirements. Computation as integration of a bond to be issued by the National Government

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION "A" 3251 09/04/01
TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 – 333
Minimum liquidity requirements. Computation as integration of a bond to be issued by the National Government

We address you to inform you that this Institution adopted the following resolution:

"- Incorporate, with effect from April 2001, in Section 7 of the norms on "Minimum liquidity requirements", the following point:
"7.2. The holding of the "National Government Bond 9% - maturity 2002" shall be admitted as a computable concept for the integration of minimum liquidity requirements, without exceeding the amount equivalent to 18% of the minimum requirement of February 2001."

We clarify that the computation of this integration will be allowed, at the value established in point 2.1.2 of Section 2 of those norms and without exceeding the stated cap, provided that the securities are maintained deposited in the account opened at the Central Registration and Clearing Center for Public Debt Instruments "CRYL" of the Central Bank.

Furthermore, we send you attached the justifications for the measure adopted and the pages that, in replacement of those previously provided, correspond to be incorporated into the ordered text of the reference.

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio Alejandro Henke
Manager of Submanager General of
Issuance of Norms Regulation and Information Regime

ANNEX: 3 pages

B.C.R.A.
JUSTIFICATIONS FOR THE RESOLUTION ON MINIMUM LIQUIDITY REQUIREMENTS. COMPUTATION AS INTEGRATION OF A BOND TO BE ISSUED BY THE NATIONAL GOVERNMENT
Annex
to
Comm. "A" 251

The National Government has projected for 9.4.01 the issuance of the "National Government Bond 9% - maturity 2002" for US$ 2,000 million, with interest payable semi-annually and with a full payment term at maturity of one year.

This bond has the distinctive characteristic of the possibility of applying the income and amortization services to the payment of certain taxes after maturity.

This peculiarity, combined with the fact that this instrument may be eligible for active swap operations with the Central Bank of the Republic Argentina within the limits established in its Organic Charter, grants it the necessary attributes to be computable as integration of liquidity requirements.

As with the other alternatives for integration of minimum liquidity requirements, except when applied to passive swaps with the Central Bank, a maximum limit is assigned to this instrument for its computation, which in this case amounts to an amount equivalent to 18% of the minimum requirement of February 2001.

In another order, it is worth remembering that the holding of national public titles, by definition, is excluded from the observance of the norms on credit risk fragmentation, and consequently, is also exempt from the limitations on financing the non-financial public sector.

MINIMUM LIQUIDITY REQUIREMENTS B.C.R.A. Section 7. Transitional provisions.
7.1. The charge rate for deficiencies in the integration of minimum liquidity requirements, which are registered in monthly positions until December 2001, will be 0.5% annual, insofar as they correspond to defects in the application of foreign currency deposits captured with adjustment to the current norms in the matter, linked to the transformation into foreign currency deposits of deposits in pesos attributable to the financing of assets in the latter currency.

The amount of these defects will not be computable to calculate the integration deficiency that determines the obligation to present framing programs referred to in point 3.2 of Section 3.

7.2. The holding of the "National Government Bond 9% - maturity 2002" shall be admitted as a computable concept for the integration of minimum liquidity requirements, without exceeding the amount equivalent to 18% of the minimum requirement of February 2001.

Its computation will be allowed at the value established in point 2.1.2 of Section 2 and without exceeding the stated cap, provided that the securities are maintained deposited in the account opened at the Central Registration and Clearing Center for Public Debt Instruments "CRYL" of the Central Bank.

Version: 4th Communication “A” 3251 Validity:
09.04.01

ORDERED TEXT SOURCE NORM
Sec. Point Paragraph Comm. Annex Point Paragraph Observations
4. 4.1. Explicit criterion.
5. “A” 2422 unique 6. According to Comm. “A” 2490, with
interpretative clarification.
6. 6.1. “A” 2422 unique 3.3. According to Comm. “A” 2705 and
2694.
6. 6.2. “A” 2422 unique 8.
6. 6.3. “A” 2422 unique 9. According to Comm. “A” 2648 and “A”
3112.
7. 7.1. “A” 2951 According to Comm. “A” 3203.
7. 7.2. “A” 3251