Resolution 049/2001

RESOLUTION OF THE BOARD OF DIRECTORS NO. 049/2001

SUBJECT: ECONOMIC POLICY ADVISORY - APPROVES MODIFICATIONS TO THE CONSOLIDATED TEXT OF THE LEGAL RESERVE REGULATION.

HAVING SEEN:

Law 1670 of October 31, 1995.

Board of Directors Resolution No. 180/97 of December 23, 1997.

Board of Directors Resolution No. 088/2000 of November 28, 2000.

Final Report CC No. 14/2001 of the Qualifying Commission for Exceptional Contracting No. 04/2001 "Services by Delegated Administration".

Report from the Economic Policy Advisory APEC-INEP No. 016/2001 of July 5, 2001.

CONSIDERING:

That the Central Bank of Bolivia, in compliance with Law 1670, has established a legal reserve regime of mandatory compliance for banks and financial intermediation entities.

That in compliance with the Authorization Resolution for the Start of the Exceptional Contracting Process for Services by Delegated Administration PRES. GAL. No. 01/2001, which authorizes the Exceptional Contracting Process No. 04/2001, the Central Bank of Bolivia invited Banking Financial Entities to participate in said process, by distributing the Terms of Reference on April 6, 2001.

That the current Legal Reserve Regulation provided that starting from July 1, 2001, funds for the payment of public official checks would be subject to 100% legal reserve.

That as a result of the economic evaluation of the Exceptional Contracting Process No. 04/2001 "Services by Delegated Administration" prepared by the Qualifying Commission, it is recommended to award the services related to the payment of public official checks, pensioners, retirees, and distinguished persons, under the regime that does not consider the application of any Legal Reserve requirement for these resources.

That in light of the above recommendation, there is a need to modify the Legal Reserve Regulation in Title III, Article 8, regarding the Legal Reserve Requirement for Other Deposits.

That in accordance with the powers conferred by Articles 7, 8, and 54 subsections a), i), and o) of Law 1670, the Board of Directors of the BCB is authorized to modify the current regulations.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Approve the modification of the Consolidated Text of the Legal Reserve Regulation in its Title III, Article 8 (Legal Reserve Requirement for Other Deposits), by eliminating the phrase: - Public official check, from the classification "Other Deposits", with the following text:

SAYS:

Article 8 (Legal Reserve Requirement for Other Deposits).

The entities included in Article 1 must constitute the legal reserve in cash, equivalent to a rate of 100% on their liabilities, in the accounts detailed below:

Other Deposits

• Judicial Deposits
• Third-party funds for operations in the Bolsín
• Third-party funds for authorized operations
• Funds to be delivered to third parties by the placement of securities
• Other obligations with the public on demand

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• Judicial Withholdings
• Prepaid credit card guarantee deposits
• Other guarantee deposits
• Other restricted obligations with the public
• Advance collections from credit card clients
• Transfer Current Accounts for Non-Banking Financial Entities
• Public official check

SHOULD SAY:

"Article 8 (Legal Reserve Requirement for Other Deposits).

The entities included in Article 1 must constitute the legal reserve in cash, equivalent to a rate of 100% on their liabilities, in the accounts detailed below:

Other Deposits

• Judicial Deposits
• Third-party funds for operations in the Bolsín
• Third-party funds for authorized operations
• Funds to be delivered to third parties by the placement of securities
• Other obligations with the public on demand

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• Judicial Withholdings
• Prepaid credit card guarantee deposits
• Other guarantee deposits
• Other restricted obligations with the public
• Advance collections from credit card clients
• Transfer Current Accounts for Non-Banking Financial Entities"

Article 2.- Repeal Article 35 of Board of Directors Resolution No. 088/2000.

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

La Paz, June 5, 2001

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Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Medinaceli V. Armando Méndez M.