Regulatory Alerts2009-03-20 | Resolución 025/2009Added · Updated
Resolution 025/2009
The Board of Directors of the Central Bank of Bolivia amends Articles 5, 7, 8, and 10 of the Regulation for the Administration of International Reserves to authorize investment in a Euro portfolio. This modification allows the Euro Portfolio to constitute up to 10% of the investment capital and establishes the Merrill Lynch French Treasury Bills Index (G0FB) as its benchmark. Additionally, the resolution increases the ex-ante probability of annual losses threshold from 4% to 8%.
BOARD RESOLUTION NO. 025/2009 SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO THE REGULATION FOR THE ADMINISTRATION OF INTERNATIONAL RESERVES.
HAVING SEEN: Law 1670 of October 31, 1995, of the Central Bank of Bolivia. Board Resolution No. 102/2008 of July 22, 2008, which approves the Regulation for the Administration of International Reserves. Report from the International Operations Management GOI No. 04/2009 of March 11, 2009. Report from the Legal Affairs Management SANO No. 071/2009 of March 13, 2009.
CONSIDERING: That Chapter II of Title II of Law 1670 establishes the functions that the BCB must carry out regarding International Reserves. That the Report from the International Operations Management GOI No. 04/2009 recommends modifying the current Regulation for the Administration of International Reserves to incorporate investment in a Euro Portfolio. That according to the Report from the Legal Affairs Management SANO No. 071/2009, the modifications to the Regulation do not contravene current legal provisions and that, in accordance with the attribution conferred by Article 54, subsection o) of Law 1670, the Board is authorized to approve, modify, and interpret the regulations of the BCB.
THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA, RESOLVES:
Article 1.- Approve the modification of Articles 5, 7, 8, and 10 of the Regulation for the Administration of International Reserves in the following terms:
SAYS: Article 5.- (Investment Capital) II. The objective of the Liquidity Tranche is to provide resources immediately to Working Capital to meet its requirements. This tranche is managed under internal administration by the International Operations Management and is composed of the Liquidity and Deposits Portfolios.
SHOULD SAY: “Article 5.- (Investment Capital) II. The objective of the Liquidity Tranche is to provide resources immediately to Working Capital to meet its requirements. This tranche is managed under internal administration by the International Operations Management and is composed of the Liquidity, Deposits, and Euro Portfolios.”
SAYS: Article 7.- (Authorized Currencies) II. The Liquidity Tranche and the Investment Portfolio are constituted in United States dollars.
SHOULD SAY: “Article 7.- (Authorized Currencies) II. The Liquidity, Deposits, and Investment Portfolios are constituted in United States dollars. The Euro Portfolio is constituted in euros, with a limit of up to 10% of the investment capital.”
SAYS: Article 8.- (Reference Comparators) The following reference comparators are established:
| Investment Capital | Reference Comparator (Benchmark) |
|---|---|
| Liquidity Tranche | |
| Liquidity Portfolio | Merrill Lynch US Treasury Bill 3 to 6 months Index (G0B2) |
| Deposits Portfolio | LIBID 6 months average in USD |
| Investment Tranche | |
| Investment Portfolio | Merrill Lynch US Treasuries 1 to 3 years Index (G102) |
| Global Portfolio | Merrill Lynch Global Government Bonds G7 1 to 3 years Index (W1G7) 90% hedged in USD. |
SHOULD SAY: Article 8.- (Reference Comparators) The following reference comparators are established:
| Investment Capital | Reference Comparator (Benchmark) |
|---|---|
| Liquidity Tranche | |
| Liquidity Portfolio | Merrill Lynch US Treasury Bill 3 to 6 months Index (G0B2) |
| Deposits Portfolio | LIBID 6 months average in USD |
| Euro Portfolio | Merrill Lynch French Treasury Bills up to 1 year Index (G0FB) |
| Investment Tranche | |
| Investment Portfolio | Merrill Lynch US Treasuries 1 to 3 years Index (G102) |
| Global Portfolio | Merrill Lynch Global Government Bonds G7 1 to 3 years Index (W1G7) 90% hedged in USD. |
SAYS: Article 10.- (Global Risk) I. The probability of recording losses in a year must be less than an ex-ante target of 4%.
SHOULD SAY: “Article 10.- (Global Risk) I. The probability of recording losses in a year must be less than an ex-ante target of 8%.”
Article 2.- The Presidency and General Management are charged with the execution and compliance of this Resolution.
La Paz, March 17, 2009.
Gabriel Loza Tellería
Gustavo Blacutt Alcalá Hugo Dorado Araníbar
Rolando Marín Ibáñez Ernesto Yáñez Aguilar
Rafael Boyán Téllez
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