BANCO CENTRAL DE THE REPUBLIC OF ARGENTINA

COMMUNICATION "A" 3304 I 20/07/01

TO FINANCIAL ENTITIES:

Ref.: Circular
LISOL 1 – 348
Minimum Liquidity Requirements and Minimum Cash.
Modification

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

"1. Substitute, with effect from 1.6.01, point 2.1.11. of Section 2. of the norms on "Minimum Liquidity Requirements" with the following:

"2.1.11. Special guarantee accounts in favor of electronic clearing chambers and for the coverage of the settlement of credit card and ATM operations.

They shall be considered, even when the balances are encumbered as guarantee for the electronic clearing and settlement chambers and deposited in their name, on behalf of the respective entity, in special accounts in United States dollars at the Central Bank of the Republic of Argentina.

The balance recorded at the close of each business day in these accounts shall accrue interest for the period until the first following business day, at the rate fixed daily and transmitted through the Foreign Exchange and Open Market Operations Desk.

The corresponding settlement shall be made available to entities at the opening of operations on the next business day via the STAF communications system; the accrued amounts shall be automatically credited to the corresponding special accounts.

In the case of accounts also used for the integration of minimum cash, the appropriation for these or for the minimum liquidity requirement shall be made by the entity after the computation period has concluded, in accordance with the procedure established by the information regime."

2. Replace, with effect from 1.6.01, points 1.2. of Section 1. and 2.1.
   -first paragraph- and 2.1.3. of Section 2. of the norms on "Minimum Cash" with the following:

"1.2. Application Base.

The minimum cash requirement shall apply to the monthly average of daily balances of included obligations, recorded at the close of each day during each calendar month.

Averages shall be obtained by dividing the sum of daily balances by the total number of days in each month.

Days on which no movement is recorded shall repeat the balance corresponding to the immediately preceding business day.

The requirement shall be observed separately for each of the currencies in which the obligations are denominated.

At the option of the entities, the requirement on demand obligations for pending payment drafts and transfers and for correspondent operations abroad in foreign currencies other than the euro or the United States dollar may be imputed to the requirement in that latter currency. This alternative may be applied provided that the requirement in currencies other than the United States dollar or the euro does not exceed the equivalent of US$ 100,000 or 1% of the minimum cash requirement of all foreign currencies, whichever is greater."

"2.1. Admitted Concepts.

The integration shall be made in the same currency corresponding to the requirement, except when the option referred to in the last paragraph of point 1.2. of Section 1. is used, in which case integration in United States dollars of the requirement for demand obligations for pending payment drafts and transfers and correspondent operations abroad in foreign currencies other than the euro or the United States dollar shall be admitted."

"2.1.3. Special guarantee accounts in favor of electronic clearing chambers and for the coverage of the settlement of credit card and ATM operations.

They shall be considered, even when the balances are encumbered as guarantee for the electronic clearing and settlement chambers and deposited in their name, on behalf of the respective entity, in special accounts in pesos and United States dollars at the Central Bank of the Republic of Argentina.

The balance recorded at the close of each business day in these accounts shall accrue interest for the period until the first following business day, at the rate fixed daily and transmitted through the Foreign Exchange and Open Market Operations Desk.

The corresponding settlement shall be made available to entities at the opening of operations on the next business day via the STAF communications system; the accrued amounts shall be automatically credited to the corresponding special accounts.

In the case of United States dollar accounts, also used for the integration of minimum liquidity requirements, the appropriation for these or for minimum cash shall be made by the entity after the computation period has concluded, in accordance with the procedure established by the information regime."

We send you attached the foundations of the measure adopted and the sheets that, in replacement of those previously provided, should be incorporated into the ordered texts of the norms on "Minimum Liquidity Requirements" and "Minimum Cash".

We greet you very attentively.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio José Rutman
Manager of Emission of Norms Principal Manager of Norms

ANEXO

B.C.R.A. FOUNDATIONS OF THE RESOLUTION ON MINIMUM LIQUIDITY REQUIREMENTS AND MINIMUM CASH. MODIFICATION
Annex I
to Com.
"A" 3304

1. At the time, when the new liquidity regime based on minimum cash on demand operations was implemented, admitted concepts for the computation of its integration were established, among others, to the current accounts of financial entities opened at this Institution in pesos, United States dollars and in other foreign currencies, and to special guarantee accounts in favor of electronic clearing chambers to the extent that they are constituted in pesos.

In addition, regarding current accounts in foreign currencies, it was established that their balances may also be computed for the integration of minimum liquidity requirements, according to the appropriation made by the entity after the period has closed.

2. In that last aspect, it is estimated that there should be no differences in treatment between current accounts and special ones constituted as guarantee for electronic document clearing operations that, ultimately, are oriented to the operational development of entities.

Therefore, it is appropriate to expressly incorporate as admitted items for the integration of minimum cash and minimum liquidity requirements the guarantee accounts for the coverage of the settlement of credit card and ATM operations, since the application of different criteria in relation to guarantee accounts for clearing is not justified, as they are similar concepts.

In this way, including the aspect referred to remuneration, the same scheme that was in force when the liquidity requirements regime was the only mechanism to keep cash reserves will be followed.

3. On the other hand, it is considered convenient to admit that the minimum cash requirements generated by pending payment drafts and transfers and by correspondent operations abroad in foreign currencies other than the euro or the United States dollar, may be integrated in that latter currency when they involve insignificant amounts, giving them an optional character for entities.

To their low significance at the system level is added the atomization in different currencies that forces entities to open as many accounts at the Central Bank or maintain as many banknotes as currencies they operate, which entails an increase in operational tasks for the administration of reserve positions and consequently of cost that has no logical basis.

To this it can be added that a similar effect occurs at this Institution since it forces the monitoring of positions in currencies that are not representative of the entity's liquidity situation.

In this sense, it is estimated that this measure may be applied when the minimum cash requirements of all obligations for those concepts in foreign currencies other than the euro and the United States dollar do not exceed the equivalent of US$ 100,000 or 1% of the minimum cash requirement of all foreign currencies of each entity, whichever is greater.

MINIMUM LIQUIDITY REQUIREMENTS B.C.R.A. Section 2. Integration.

The computation of this integration shall be admitted provided that:
i) The entity agrees with the counterparty that it informs Deutsche Bank, New York, about the execution of the option contract, with adjustment to the notification model included in point 6.2. of Section 6. ii) The original version of the option contract corresponding to the entity and the relevant securities are kept in custody at Deutsche Bank, New York, or at the custodian agents designated by it. To this end, entities must sign the text whose model is included in point 6.4. of Section 6. iii) The entity does not maintain contracts for financial derivative operations regarding securities of the country, whose fulfillment could mean the neutralization of those operations. The entity must refrain from formalizing other operations with the option-issuing bank whose results, according to the applicable master agreements, may be subject to the eventual obligation to offset credits with debts. Consequently, there are no impediments for the local entity to be simultaneously a seller of a call option regarding the securities involved in the put option, configuring a "collar" operation.

Likewise, the computation of this integration shall be admitted, from the day on which the operation is negotiated, provided that the supporting documentation of the put option -option notification and contract- is deposited in the custodian bank within the 72 business hours following.

2.1.10. Loans with formal mortgage guarantee formalized between 15.10.95 and 18.7.97, according to the terms of the model contract adopted by the financial entities referred to in the repealed Section 9. of the ordered text disseminated by Communication "A" 2422, originated and carried out under the guidelines established by the Mortgage Bank or DB Program Manager S.A. (Deutsche Morgan Grenfell), and the participation certificates and debt-representative titles issued by the trustees, regarding trusts referred to the cited mortgage loans, provided that the local entity is the holder of the right to exercise a put option on the portfolio or the securities that can be exercised at any time within the following 60 days, observing all other safeguards contained in point 2.1.9.

2.1.11. Special guarantee accounts in favor of electronic clearing chambers and for the coverage of the settlement of credit card and ATM operations. (point in force from 01.06.01)
Version: 5th Communication "A" 3304 Validity:
20.07.01

MINIMUM LIQUIDITY REQUIREMENTS B.C.R.A. Section 2. Integration.

They shall be considered, even when the balances are encumbered as guarantee for the electronic clearing and settlement chambers and deposited in their name, on behalf of the respective entity, in special accounts in United States dollars at the Central Bank of the Republic of Argentina.

The balance recorded at the close of each business day in these accounts shall accrue interest for the period until the first following business day, at the rate fixed daily and transmitted through the Foreign Exchange and Open Market Operations Desk.

The corresponding settlement shall be made available to entities at the opening of operations on the next business day via the STAF communications system; the accrued amounts shall be automatically credited to the corresponding special accounts.

In the case of accounts also used for the integration of minimum cash, the appropriation for these or for the minimum liquidity requirement shall be made by the entity after the computation period has concluded, in accordance with the procedure established by the information regime.

2.1.12. Guarantees for check cancellation operations.

The admitted concepts for the integration of minimum liquidity requirements may be considered for such purpose, even if they are affected as guarantee for check cancellation operations and deposited in special accounts at the Central Bank of the Republic of Argentina.

2.2. Computation.

The compliance with the integration of minimum liquidity requirements shall be measured on the basis of the monthly average of daily balances of the concepts admitted for such effect, recorded during the same month to which the requirements correspond, dividing the sum of said balances by the total number of days of the period. Days on which no movement is recorded shall repeat the balance corresponding to the immediately preceding business day.

On no day of the month shall the sum of the balances of the admitted concepts, recorded at the close of each day, be less than 60% of the total requirement determined for the immediately preceding month, recalculated based on the requirements and concepts in force in the month to which the requirements correspond, without considering the effects of the application of what is provided in point 1.7.1. of Section 1.

This daily requirement shall be 80% when in the previous computation period a deficiency in integration in monthly average higher than the admitted transfer margin has been recorded.

Version: 5th Communication "A" 3304 Validity:
20.07.01

MINIMUM LIQUIDITY REQUIREMENTS B.C.R.A. Section 2. Integration.

2.3. Maximum computation limits.

The integration in the admitted concepts shall only be computable up to the following maximum limits, measured with respect to the minimum requirement of each period:

Concept Maximum computable
-in %- i) Points 2.1.1, 2.1.11. and 2.1.12. (together). 100 ii) Point 2.1.2. 20 iii) Point 2.1.3. to 2.1.10. (together). 80 a) Points 2.1.7. and 2.1.8. (within the margin of 80%) 30 b) Point 2.1.9. (within the margin of 80%) 10 c) Point 2.1.10. (within the margin of 80%) 5

Version: 1st Communication "A" 3304 Validity:
20.07.01

ORDERED TEXT ORIGIN NORM
Section Point Paragraph Com. Annex Point Paragraph Observations
2. 2.1.4. "A" 2422 unique 3.1.10. According to Com. "A" 2648, "A"
3231, 3274 and "A" 3290.
2. 2.1.5. "A" 2422 unique 3.1.3. According to Com. "A" 2663, "A"
3274 and "A" 3290.
2. 2.1.6. "A" 2422 unique 3.1.8. According to Com. "A" 2648, "A"
3274 and "A" 3290.
2. 2.1.7. "A" 2422 unique 3.1.11. According to Com. "A" 2648,
2705, "A" 3274 and "A" 3290.
2. 2.1.8. "A" 2422 unique 3.1.9. According to Com. "A" 2648, "A"
3274 and "A" 3290.
2. 2.1.9. "A" 2422 unique 3.1.5. According to Com. "A" 2663,
2648, "A" 3274 and "A" 3290.
2. 2.1.10. "A" 2422 unique 3.1.7. According to Com. "A" 2648 and "A"
3274.
2. 2.1.11 "A" 3274 According to Com. "A" 3304.
2. 2.1.12. "A" 3274
2. 2.2. "A" 2422 unique 3. 1st and 2nd According to Com. "A" 2663,
2833, 2915, 3195, 3246,
3274 and 3302.
2. 2.3. "A" 2422 unique 3.2. According to Com. "A" 2705, 2817
and 3274.
3. 3.1.1. "A" 2422 unique 5. According to Com. "A" 2490, modified by Com. "A"
2833 and 2915.
3. 3.1.2. "A" 2422 unique 5. According to Com. "A" 2490.
3. 3.1.3. "A" 2422 unique 5. According to Com. "A" 2490 and "A"
3100.
3. 3.1.4. "A" 2422 unique 5. According to Com. "A" 2490 and "A"
3274.
"B" 5159
3. 3.2.1. "A"3274
3. 3.2.2. "A" 2895 According to Com. "A" 2991 and "A"
3274.
3. 3.3. "A" 2833 2. According to Com. "A" 2895 and "A"
3274.
3. 3.3.2. "A" 2833 According to "A" 3274.
4. 4.1. Explicit criterion.
5. "A" 2422 unique 6. According to Com. "A" 2490, with
interpretative clarification.
6. 6.1. "A" 2422 unique 3.3. According to Com. "A" 2705, 2694
and "A" 3274.
6. 6.2. "A" 2422 unique 8. According to Com. "A" 3274.
6. 6.3. "A" 2422 unique 9. According to Com. "A" 2648 and "A"
3112.
6. 6.4. "A" 3132 unique
6. 6.5. "A" 3290
7. 7.1. "A" 3251 According to Com. "A" 3274.

MINIMUM CASH B.C.R.A. Section 1. Requirement.

The requirement shall be observed separately for each of the currencies in which the obligations are denominated.

At the option of the entities, the requirement on demand obligations for pending payment drafts and transfers and for correspondent operations abroad in foreign currencies other than the euro or the United States dollar may be imputed to the requirement in that latter currency. This alternative may be applied provided that the requirement in currencies other than the United States dollar or the euro does not exceed the equivalent of US$ 100,000 or 1% of the minimum cash requirement of all foreign currencies, whichever is greater.

1.3. Minimum Cash.

The minimum cash amounts resulting from applying the following rates shall be integrated:

Concept Rate in %
1.3.1. Current account deposits. 15,5
1.3.2. Savings account deposits. 15,5
1.3.3. Pupilar usuries, special accounts for closed circles,
"Unemployment Fund for construction industry workers", "Payment of Remuneration" and special current accounts for legal entities. 15,5
1.3.4. Other deposits and demand obligations, including with banks and foreign correspondents, pension benefits credited by ANSES pending cashing and immobilized balances corresponding to obligations included in these norms. 15,5
1.3.5. Demand deposits -savings accounts, current accounts,
special current accounts, etc., except for accounts "Unemployment Fund for construction industry workers" and "Payment of Remuneration"-, whose remuneration exceeds by more than one and a half points the nominal annual interest rate for savings account deposits in pesos or United States dollars, as applicable, resulting from the daily survey of the B.C.R.A. of the second day prior to the imposition. 80
1.3.6. Unused balances of current account advances formalized. 15,5
Version: 2nd Communication "A" 3304 Validity:
01.06.01

MINIMUM CASH B.C.R.A. Section 1. Requirement.

1.3.7. Demand placements -whatever the form of imposition and its remuneration- that, at minimum, must constitute the credit of common investment funds (according to what is provided in the Norms of the National Securities Commission). 50
1.3.8. Deposits in current accounts of non-bank financial entities, computable for the integration of their minimum cash. 100

1.4. Alternative requirement increase to debt placement.

The exercise of the option not to issue debt, as provided in the norms on "Mandatory Issuance and Placement of Debt", shall determine the increase of one percentage point of the minimum cash rates of all concepts, from the month following that in which the maximum term between each issuance and placement operates.

This higher requirement shall automatically expire the month following that in which the entity makes a placement as provided in the norms on "Mandatory Issuance and Placement of Debt", prior to demonstrating this circumstance to the Superintendence of Financial and Currency Entities.

In the event of the use of trick or action that in the judgment of the Superintendence of Financial and Currency Entities implies, directly or indirectly, circumventing the compliance with the mandatory debt placement, the minimum cash rates shall be increased by three additional percentage points.

1.5. Specific requirement increases due to liability concentration.

When an excessive concentration of liabilities (in holders and/or terms) is verified, which implies a significant risk regarding the individual liquidity of the financial entity and/or has an important negative effect on systemic liquidity, additional minimum cash may be fixed on the liabilities included in the financial entity and/or those complementary measures that are deemed pertinent.

It will be considered that this situation is configured when, among others, any of the following factors are present:

• A high percentage of liabilities is concentrated in the same holder or holders.
• In term obligations, the residual term is short.
• The aforementioned liabilities represent a significant percentage with respect to the integration of minimum cash and minimum liquidity requirements and/or the total of private sector deposits in the entity.

Version: 2nd Communication "A" 3304 Validity:
01.06.01

MINIMUM CASH B.C.R.A. Section 1. Requirement.

1.6. Transfers.

1.6.1. Admitted Margin.

The integration of the minimum cash of the positions in monthly average of daily balances of included obligations shall not be less than 90% of the requirement resulting from the following expression:

EEMA (n) = EEF (n) + ENI (n-1)

where

EEMA (n): adjusted minimum cash requirement corresponding to month "n".

EEF (n): minimum cash requirement according to current norms corresponding to month "n".

ENI (n-1): requirement not integrated in month "n-1".

1.6.2. Utilization Period.

The admitted transfer of the requirement not integrated in each month to the next position may be made up to a maximum of six months, counted from the first month -inclusive- in which the option to use it is chosen according to what is provided previously or from the first immediate position subsequent to that in which the defects transferred are compensated or charge is paid on them.

Version: 2nd Communication "A"3304 Validity:
01.06.01

MINIMUM CASH B.C.R.A. Section 2. Integration.

2.1. Admitted concepts.
Integration must be carried out in the same currency as required, except when the option referred to in the last paragraph of point 1.2. of Section 1. is used, in which case integration in United States dollars is admitted for the requirement arising from obligations for sight drafts and pending transfers and foreign currency correspondent operations other than the euro or the United States dollar.

2.1.1. Cash.
It includes banknotes and coins held in the entity's offices and in custody at other financial entities.

2.1.2. Current accounts of financial entities opened at the Central Bank in pesos, United States dollars, or other foreign currencies.
The balance recorded at the close of each business day in these accounts will accrue interest for a term of one business day, at the rate fixed daily and transmitted through the Foreign Exchange and Open Market Operations Desk. The corresponding settlement will be made available to entities at the opening of operations on the following business day via the STAF communications system; the accrued amounts will be automatically credited to the corresponding current accounts. In the case of foreign currency accounts, also used for the integration of minimum liquidity requirements, the appropriation for these or for the minimum cash will be carried out by the entity after the calculation period has concluded, in accordance with the procedure established by the reporting regime. Special current accounts opened for the crediting of pension benefits are not computable.

2.1.3. Special guarantee accounts in favor of electronic clearing chambers and for the coverage of the settlement of credit card operations and automated teller machines.
These will be considered, even when balances are affected as security for electronic clearing chambers and settlement and deposited in the name of such chambers, on behalf of the respective entity, in special accounts in pesos and United States dollars at the Central Bank of the Argentine Republic. Version: 2nd Communication “A” 3304 Validity: 01.06.01

MINIMUM CASH B.C.R.A. Section 2. Integration.
The balance recorded at the close of each business day in these accounts will accrue interest for the term until the first following business day, at the rate fixed daily and transmitted through the Foreign Exchange and Open Market Operations Desk. The corresponding settlement will be made available to entities at the opening of operations on the following business day via the STAF communications system; the accrued amounts will be automatically credited to the corresponding special accounts. In the case of United States dollar accounts, also used for the integration of minimum liquidity requirements, the appropriation for these or for the minimum cash will be carried out by the entity after the calculation period has concluded, in accordance with the procedure established by the reporting regime.

2.1.4. Current accounts of non-bank financial entities.
Opened at commercial banks for the integration of the minimum cash requirement.

2.1.5. Public securities.
National public securities that have normal and habitual quotation.

2.2. Calculation.
The compliance with the integration of minimum cash will be measured based on the monthly average of daily balances of the concepts admitted for this purpose, recorded during the same month to which the minimum cash corresponds, dividing the sum of said balances by the total number of days in the period. On days when no movement is recorded, the balance corresponding to the immediately preceding business day must be repeated. In the case of current accounts opened at commercial banks by non-bank entities, the balances reflected in account summaries will be taken into account. The calculation of national public securities will be carried out taking into account the value that arises for each day of the month based on the daily quotation of the securities. Version: 2nd Communication “A” 3304 Validity: 01.06.01

MINIMUM CASH B.C.R.A. Section 2. Integration.

2.3. Maximum calculation limits.
Integration in the admitted concepts will only be computable up to the following maximum limits, measured with respect to the minimum cash of each period:

Concept	Maximum computable -in %-
i) Points 2.1.1 to 2.1.4. (collectively)	100
ii) Point 2.1.5.	0

Version: 1st Communication “A” 3304 Validity: 01.06.01

B.C.R.A. ORIGIN OF THE PROVISIONS INCLUDED IN THE CONSOLIDATED TEXT OF THE MINIMUM CASH REGULATIONS

CONSOLIDATED TEXT	ORIGIN RULE	OBSERVATIONS
Sec.	Point	Párr.	Com.	Anexo	Sec.	Point	Párr.
1.1.	“A” 3274	II	1.	1.1.
1.1.1.	“A” 3274	II	1.	1.1.1.
1.1.2.	“A” 3274	II	1.	1.1.2.
1.1.3.	“A” 3274	II	1.	1.1.3.
1.2.	“A” 3274	II	1.	1.2.	According to Com. “A” 3304.
1.3.	“A” 3274	II	1.	1.3.
1.3.1.	“A” 3274	II	1.	1.3.1.
1.3.2.	“A” 3274	II	1.	1.3.2.
1.3.3.	“A” 3274	II	1.	1.3.3.
1.3.4.	“A” 3274	II	1.	1.3.4.
1.3.5.	“A” 3274	II	1.	1.3.5.
1.3.6.	“A” 3274	II	1.	1.3.6.
1.3.7.	“A” 3274	II	1.	1.3.7.
1.3.8.	“A” 3274	II	1.	1.3.8.
1.4.	“A” 3274	II	1.	1.4.
1.5.	“A” 3274	II	1.	1.5.
1.6.	“A” 3274	II	1.	1.6.
1.6.1.	“A” 3274	II	1.	1.6.1.
1.6.2.	“A” 3274	II	1.	1.6.2.
2.1.	“A” 3274	II	2.	2.1.	According to Com. “A” 3304.
2.1.1.	“A” 3274	II	2.	2.1.1.
2.1.2.	“A” 3274	II	2.	2.1.2.
2.1.3.	“A” 3274	II	2.	2.1.3.	According to Com. “A” 3304.
2.1.4.	“A” 3274	II	2.	2.1.4.
2.1.5.	“A” 3274	II	2.	2.1.5.
2.2.	“A” 3274	II	2.	2.2.
2.3.	“A” 3274	II	2.	2.3.
3.1.	“A” 3274	II	3.	3.1.
3.1.1.	“A” 3274	II	3.	3.1.1.
3.1.2.	“A” 3274	II	3.	3.1.2.
3.1.3.	“A” 3274	II	3.	3.1.3.
3.1.4.	“A” 3274	II	3.	3.1.4.
3.2.	“A” 3274	II	3.	3.2.
3.2.1.	“A” 3274	II	3.	3.2.1.
3.2.2.	“A” 3274	II	3.	3.2.2.
3.3.	“A” 3274	II	3.	3.3.
3.3.1.	“A” 3274	II	3.	3.3.1.
3.3.2.	“A” 3274	II	3.	3.3.2.
4.1.	“A” 3274	II	4.	4.1.
5.1.	“A” 3274	II	5.	5.1.
6.1.	“A” 3274	II	6.	6.1.