RESOLUTION No. JPRM-2021-003-A

THE MONETARY POLICY AND REGULATION BOARD

CONSIDERING:

That, through the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization, published in the First Supplement of the Official Register No. 443, of May 3, 2021, the Organic Code of Monetary and Financial Law was reformed;

That, through Article 47.1 of the Organic Code of Monetary and Financial Law, the Monetary Policy and Regulation Board is created as part of the Executive Branch, responsible for the formulation of monetary policy and as the highest governing body of the Central Bank of Ecuador; and its composition and functioning are determined;

That, Article 47.6 of the same legal body determines the functions of the Monetary Policy and Regulation Board; and in numeral 24 of the cited article, it is determined that this collegiate body must issue the Operating Regulations of the Board;

That, the Monetary Policy and Regulation Board, in ordinary session No. 001-2021 held on Thursday, November 4, 2021, resolved to issue the norms that regulate its functioning; and,

In exercise of the powers conferred upon it by Article 47.1 of the Organic Code of Monetary and Financial Law, the Monetary Policy and Regulation Board issues:

OPERATING REGULATIONS OF THE MONETARY POLICY AND REGULATION BOARD

CHAPTER I

OBJECT AND SCOPE

ARTICLE 1.- Object: The purpose of this norm is to regulate the internal functioning of the Monetary Policy and Regulation Board.

ARTICLE 2.- Scope: This norm is applicable to full members and to persons who participate with voice but without vote in the Board. It also applies to the Administrative Secretary and the advisory and support staff of the Board.

CHAPTER II

OF THE BOARD

ARTICLE 3.- Board: The Monetary Policy and Regulation Board is the organism of the Executive Branch with domicile in the Metropolitan District of Quito, responsible for the formulation of monetary policy and is the highest governing body of the Central Bank of Ecuador, which will instrument this policy.

The Monetary Policy and Regulation Board is composed of three members, designated and sworn in by the National Assembly, who have voice and vote and will serve for a term of four (4) years.

The Monetary Policy and Regulation Board will elect from among its members a President and a Substitute President, for a term of two (2) years, who may be reelected for one additional term.

The position of member of the Monetary Policy and Regulation Board is incompatible with any other position or service in the private, public, or political sector, whether remunerated or not, with the exception of university teaching, a fact that must be brought to the knowledge of the Presidency of the Board.

The President of the Financial Policy and Regulation Board, the General Manager of the Central Bank, and a delegate from the entity in charge of public finances will participate in the deliberations of the Monetary Policy and Regulation Board, with voice but without vote.

ARTICLE 4.- Functions: The functions and attributes of the Board shall be:

1. Formulate policy in the monetary sphere and monitor its application by the Central Bank of Ecuador, to preserve the integrity and sustainability of the dollarization monetary system and the financial system;

2. Issue the Code of Ethics of the Central Bank of Ecuador, which will include the Monetary Policy and Regulation Board;

3. Present annual reports to the President of the Republic;

4. Present to the President of the Republic proposals for modification of legislation in the monetary matter;

5. Establish the policies of the Central Bank of Ecuador and supervise their implementation;

6. Monitor compliance with: the functions of the Central Bank of Ecuador;

7. Formulate the policy for the operations of the Central Bank of Ecuador;

8. Formulate policy and regulate the management of physical means of payment;

9. Contribute to the financial stability of the country, in coordination with the Financial Policy and Regulation Board, and with control agencies;

10. Evaluate risks to financial stability and issue macroprudential regulations within the scope of its competence, in consultation with the Financial Policy and Regulation Board, without prejudice to its independence;

11. Establish interest rates through which the Central Bank of Ecuador will intervene in the monetary market;

12. Regulate the central payment system, as well as the regulation, permission, registration, monitoring, and supervision of auxiliary payment systems;

13. Define the investment policy for international reserves;

14. Approve the increase in capital of the Central Bank of Ecuador;

15. Establish and regulate the functioning of committees that may be necessary for the functioning of the Bank;

16. Approve the budget of the Central Bank of Ecuador and supervise its execution;

17. Review and approve the annual financial statements of the Central Bank of Ecuador;

18. Approve the Statute of the Central Bank of Ecuador, and define the regulatory framework for contracting, promotions, and the exercise of disciplinary control over the employees of the Central Bank of Ecuador;

19. Appoint the banking auditor of the Central Bank of Ecuador;

20. Approve the policy for the selection and rotation of external auditors and appoint the external auditor of the Central Bank of Ecuador, upon proposal of the Audit Committee;

21. Approve the plan and dynamics of accounting accounts and the accounting policies of the Central Bank of Ecuador in consonance with internationally recognized accounting standards;

22. Appoint the General Manager and supervise their management;

23. Appoint the Administrative Secretary of the Monetary Policy and Regulation Board and establish their functions;

24. Issue the operating regulations of the Monetary Policy and Regulation Board;

25. Set commissions and fees for services of the Central Bank of Ecuador;

26. Constitute permanent or occasional technical committees, if deemed necessary, to expand the study and analysis of topics within the competence of the Board;

27. Designate, from among its members, those who represent the Board before committees or collegiate bodies established by law or derived from agreements, or created by the Board;

28. Request from the Central Bank of Ecuador any information, study, or analysis required to fulfill its functions;

29. Adopt any other administrative action; and,

30. Those others conferred upon it by law.

To fulfill these functions, the Monetary Policy and Regulation Board will issue norms in matters within its competence without altering legal provisions.

ARTICLE 5.- Committees: The committees referred to in the preceding article will be constituted with public servants from the areas of the Central Bank of Ecuador corresponding to the theme. The committees may be composed of all members of the Board and with the staff of the Central Bank of Ecuador or another entity deemed necessary, depending on the topic to be addressed.

For the proper fulfillment of their activities, the committees may request, through the person presiding over them, information from any other entity in the public sector that is required for the fulfillment of the Board's functions. For the exercise of their functions, the Monetary Policy and Regulation Board may request from any public or private institution the information it deems necessary.

CHAPTER III

OF THE MEMBERS

ARTICLE 6.- Members: The members of the Monetary Policy and Regulation Board have the following rights and attributes:

a) Present policy and regulation proposals; b) Receive summonses with a minimum advance of 48 hours from the day of the session, except for sessions qualified by the President of the Board as urgent, in which case the agenda and supporting documents must be available to them; c) Obtain the information required to fulfill their functions; d) Participate in the debate during sessions; e) Vote affirmatively or negatively; abstention is not permitted; f) Request the suspension of the convened meeting, in case the supporting information presented has not been received; and, g) All others inherent to their status as members.

ARTICLE 7.- Conduct of Members: Members of the Board, as well as attendees at Board sessions, shall maintain confidentiality regarding matters known, discussed, and deliberated within the Board and shall not seek or accept instructions from third parties.

Board members must observe standards of ethical conduct in the performance of their functions; they must act with honesty, independence, impartiality, and without consideration for their private interests, avoiding conflicts of interest.

The acts of the Monetary Policy and Regulation Board do not require the concurrence of a distinct entity, nor approval by other organs or institutions of the State.

ARTICLE 8.- Policy and Regulation Proposals: Policy and regulation proposals or their reforms may be presented by Board members or the General Manager of the Central Bank of Ecuador.

Proposals from members will be channeled through the Administrative Secretariat so that within two weeks following, they are brought to the knowledge of the Technical Committee for analysis and, if necessary, request the Central Bank to present the respective technical and legal reports.

CHAPTER IV

OF THE PRESIDENT

ARTICLE 9.- Functions: The functions of the President of the Monetary Policy and Regulation Board, in addition to those established in Article 47.8 of the Organic Code of Monetary and Financial Law, are the following:

a) Define the agenda of Board sessions; b) Summon, install, suspend, close, and declare terminated sessions; c) Exercise the casting vote; d) Present to the Board for consideration policy and regulation proposals or their reforms;

e) Summon Board members to Technical Committee and coordination meetings, when required; f) Ensure compliance with policies and resolutions issued by the Board; g) Review and process communications addressed to the Board and, when deemed pertinent, bring them to the knowledge of its members; h) Sign documents concerning the presidency of the Board and those corresponding to the exercise of its representation; i) Sign jointly with the Administrative Secretary of the Board, the minutes of sessions and approved resolutions; j) Authorize service commissions, per diems, subsistence, and mobilization payments for the advisory and administrative staff of the Board; k) Resolve immediately and provisionally any internal matter of the Board not provided for in these norms, presenting it to the Board in the next session for decision; and, l) Exercise other functions indicated by the Organic Code of Monetary and Financial Law, and those legally conferred upon them.

ARTICLE 10.- Absence of the President: In case of temporary absence of the President of the Board, they will be replaced by the Substitute President.

In case of definitive absence of the President of the Board, they will be replaced by the Substitute President for the remainder of the titular's term.

CHAPTER V

OF THE ADMINISTRATIVE SECRETARY

ARTICLE 11.- Appointment: The Monetary Policy and Regulation Board will appoint the Secretary of the Board and it will be at the free discretion of the same Board to remove them.

ARTICLE 12.- Functions: The functions of the Administrative Secretary of the Board are the following:

a) Receive documentation and reports submitted to the knowledge or approval of the Board by members; b) At the request of the President, issue summonses for Board sessions attaching the agenda with supporting documentation and reports for each topic to be treated in the session. c) At the request of the President of the Board, verify the quorum, read the agenda prior to its approval, request Board members to inform on the existence of subsequent conflicts of interest, as determined in Article 7 of the Organic Code of Monetary and Financial Law, and record such pronouncement in the minutes; d) Request Board members to vote on the point in question, for which they will previously publicly inform the terms of the motion presented; e) Participate in Board sessions with informative voice;

f) Draft and prepare the minutes of Board sessions, within a period not exceeding fifteen days from their closure; g) Sign together with the President of the Board the minutes of sessions, record the reasons regarding attendees, the votes recorded in the Board's resolutions, and certify their resolutions; h) Keep, conserve, and safeguard under their responsibility the archive of session minutes, resolutions, and other documents and files of the Board; i) Notify resolutions and other dispositions of the Board. The notification will be carried out appearing a certified copy of the corresponding resolution; j) Deliver to Board members certified copies of resolutions and approved session minutes when requested, unless they have the character of reserved, in which case, it must be previously approved by the President; k) Maintain, administer, and properly custodian under their responsibility, ordered and foliated, the documentary and magnetic archive. l) Code the Resolutions of the Board and keep them updated; m) Keep an ordered list of all reserved files and information; n) Receive and certify the presentation of communications, petitions, writings, and any other request addressed to the Board; o) Attend to and answer requests presented to the Board on administrative matters; p) Issue certified copies of Board documents, required by competent authority. In the case of reserved information, this will be delivered prior to authorization by the President of the Board; q) Request the area of the Central Bank of Ecuador corresponding to publish the resolutions of the Monetary Policy and Regulation Board on its website, within a maximum term of two days from their issuance, except those qualified as reserved; and r) Request the publication of resolutions of the Monetary Policy and Regulation Board in the Official Register, unless they are reserved; s) Those others assigned to them by the Board.

Additionally, it is incumbent upon the Secretary to raise and keep updated the information of the Monetary Policy and Regulation Board on the website of the Central Bank, in accordance with what is established in the Law of Transparency and Access to Public Information and its General Regulation.

CHAPTER VI

OF TOPICS WITH RESERVED CHARACTER

ARTICLE 13.- Presentation: Board members will present policy and regulation proposals they consider reserved in a closed envelope addressed to the President. The President will summon a meeting with reserved character, which will be analyzed and qualified previously in that session by the Board.

ARTICLE 14.- Archive: The Administrative Secretary will maintain a special archive of all information qualified and treated as reserved. For this purpose, they must encrypt documents with codes different from those used in files that do not have the reserved qualification.

CHAPTER VII

OF SUMMONSES

ARTICLE 15.- Summons: The Administrative Secretary of the Board, by disposition of the President, will summon to ordinary monthly sessions, with at least 48 hours of advance notice, and to extraordinary sessions when the President of the Board, of their own will or at the request of two of its members, requests it to treat specific topics; always accompanying the corresponding supporting documents, if necessary due to size, the download link of a digital storage repository will be attached, keeping the necessary security measures.

Summonses must be made physically or by electronic means. For the purposes of the sending of summonses and Board sessions, all days of the year will be considered business days. Summonses may be canceled by decision of the President of the Board, of their own will or at the request of two of its members. In the case of extraordinary sessions, when it is necessary and urgent, the summons may be made without the period established in this article, and the necessary documents for the treatment of the topics may be delivered to Board members up to the start of the session.

The summons will expressly state whether the session is ordinary or extraordinary, if it is with physical attendance, through technological means, or mixed. The summons will include the agenda and will also establish if topics with reserved character will be treated and the connection link if necessary. In the case of sessions held through technological means, the summons must obligatorily contain the date and maximum time for the casting of the vote by Board members. This time may be extended before its expiration, by disposition of the President of the Board.

In the case of extraordinary sessions and those to treat topics with reserved character, when it is necessary and urgent, the summons may be verbal or written, without the period established in this article, and the necessary documents for the treatment of the topics may be delivered to Board members up to the start of the session. The President of the Board may summon these sessions to any of the authorities described in the ninth paragraph of Article 47.1 of the Organic Code of Monetary and Financial Law.

CHAPTER VIII

OF SESSIONS

ARTICLE 16.- Sessions: The Board will meet physically or in person in any place in the country, ordinarily each month and extraordinarily when summoned by the President of the Board, ex officio or at the request of at least two of its members, to treat specific topics. When sessions are virtual or mixed, it will not matter where the members are located. The quorum required for the installation of the Board is with the attendance of two of its members with the right to vote.

Board sessions will be held for the specific purpose of knowing, treating, and resolving the topics determined in the summons. In order to prepare the respective minutes, interventions in sessions may be recorded through the respective technological means; however, by disposition of the President of the Board, those matters declared as reserved may not be recorded. Public servants responsible for the presentation of the topics to be treated in the corresponding session, as well as attendees, will participate observing the agenda, prior authorization of the President of the Board, and must respect confidentiality.

ARTICLE 17.- Forms of Sessions: Generally, the installation and development of sessions will be held in person with Board members in the place, date, and time indicated in the summons.

Nevertheless, for logistical, health or physical security reasons, or extraordinary reasons by one of its members, qualified by the President, the Board may meet using technological means for all or part of its members.

The Board may meet in ordinary or extraordinary sessions to treat topics with reserved character; the documents associated with the topic or topics will be delivered to the main members in a closed envelope, fully identified, in the place designated by the President.

When in an ordinary or extraordinary session a particular topic is declared reserved, the documents associated with the topic may be delivered in a closed envelope at the very moment of its treatment. Documentation related to these sessions will have the character of reserved. Reserved topics cannot be treated when the ordinary or extraordinary session is held using technological means.

If for any reason the President of the Board must be absent from a session, the Substitute President will preside over the meeting so that said meeting can continue and conclude when appropriate.

ARTICLE 18.- Decisions: Decisions of the Board will be taken with the affirmative vote of at least two of its members unless the law establishes, for certain matters, different treatments.

The votes of Board members will be expressed affirmatively and abstention is not permitted.

The Board will decide, in each session, on the various matters on the agenda that were submitted to its knowledge and approval. Nevertheless, the President, when considering that Board members do not have sufficient time to expose their opinions regarding any of the points on the agenda, may propose the postponement of its knowledge and decision, keeping the session prorogued for up to one next business day.

Votes once emitted cannot be modified.

Votes emitted outside the time indicated in the summons, or in case of abandonment of the corresponding session, will be considered as negative.

ARTICLE 19.- Resolutions: The acts and decisions taken by the Monetary Policy and Regulation Board will be expressed through resolutions, in accordance with what is established in Article 47.7 of the Organic Code of Monetary and Financial Law.

Resolutions on policies and regulations issued by the Board will be numbered successively, maintaining a sequential number that begins from 1, adding the necessary number of zeros, adding the year of issuance and an identifier code according to the following nomenclature:

• M: Monetary
• A: Administrative
• G: General

Example: RESOLUTION No. JPRM-2021-001-A.

Consultations, requests, or orders related to the formulation of policies and regulations will be known and resolved by the Board, and made known to the interested party through communication signed by the President of the Board or their delegate. Other requests or orders presented will be attended to by the Administrative Secretariat of the Board.

ARTICLE 20.- Reconsideration: Any member of the Board may raise, with the support of at least one other member, the reconsideration of a decision, up to the next session, provided that the resolved matter has not entered into force. To resolve a reconsideration, the affirmative vote of the majority of attending members will be required. From reconsiderations, new reconsiderations cannot be raised.

CHAPTER IX

OF THE MINUTES OF THE BOARD

ARTICLE 21.- Minutes: A minute of a resolutive character will be drawn up for each session of the Board. The Administrative Secretary of the Board will be responsible for its elaboration, in which the following will be stated:

a) Number, place, date, and start and end time of the session; b) Persons who attended; c) Agenda; d) Declaration of attending members on the existence or non-existence of conflict of interest, according to the provision of Article 7 of the Organic Code of Monetary and Financial Law; e) Main motivations, observations, deliberations, and brief relation of the antecedents of each of the topics treated and summary of the opinions expressed by those who participated ---