Resolution 071/2001

BOARD RESOLUTION NO. 071/2001 SUBJECT: FINANCIAL ENTITIES MANAGEMENT – APPROVES PAYMENT TO BANKS OF THE COMMISSION FOR THE ADMINISTRATION OF TRANSFER CURRENT ACCOUNTS FOR THE LEGAL RESERVE TRANSFER OF NON-BANK ENTITIES

HAVING SEEN: Law 1670 of October 31, 1995 Board Resolution No. 180/97 of December 23, 1997. Board Resolution No. 088/2000 of November 28, 2000. PRES-GAL Resolution 03/2001 of June 12, 2001, which awards the correspondent services. The Correspondency Contract signed on June 24, 1998, between the Central Bank of Bolivia and the banking entities that were awarded the service, valid between June 1, 1998, and June 30, 2001. The Financial Services Contracts signed between the BCB and banking entities starting in May 1998 and valid until December 31, 2000. The Transfer Current Account Opening Contracts signed between non-bank entities and the administering banks. Internal Communication GOM-SOSP No. 266/2001 of May 29, 2001, through which the Monetary Operations Management informs the Financial Entities Management of the proposals presented by the Financial Entities. Internal Communication of the Legal Affairs Management SAJU No. 785/2001 of June 28, 2001. Report from the Financial Entities Management GEF – SOPI No. 258/2001 of July 31, 2001. Complementary report from the Financial Entities Management GEF-SOPI No. 261/2001 of July 31, 2001.

//2. B.R. No. 071/2001 Internal Communication of the Legal Affairs Management SAJU No. 940/2001 of July 30, 2001. Internal Communication of the Legal Affairs Management GAL No. 086/2001 of July 31, 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 the Legal Reserve Regulation establishes that non-bank entities that do not have a reserve account at the Central Bank of Bolivia must constitute the Reserve through Transfer Current Accounts that will be opened in banking financial entities. That the Central Bank of Bolivia has delegated the administration of Transfer Current Accounts to banking entities through a Financial Services Contract signed to implement the Legal Reserve Regulation. That the Financial Services Contracts signed between the BCB and banking entities, starting in May 1998 and which were valid until December 31, 2000, determine in Article 5, numeral 5.7 that the BCB will pay the commission for the administration of Transfer Current Accounts to banking entities. That the Correspondency Contract valid until June 2001, signed between the Central Bank of Bolivia and Banking Entities in Clause third, bullet 3, determines that it is part of the Correspondency Service the ".. Receipt of legal reserve deposits from non-bank financial intermediation entities.", so correspondent banks provided this service until June 30, 2001, under the terms and conditions of said contracts. That it is necessary to honor the commission for the Administration of Transfer Current Accounts agreed by contract with banking entities that did not win the Correspondency Service, a commission that was not defined as it had not been incorporated as a separate item in the first Correspondency Services tender.

//3. B.R. No. 071/2001 That the Legal Reserve Regulation approved by Board Resolution 088/2000 determines in its Article 20 that "The Monetary Operations Management of the BCB will include in the tender for correspondent banking services, the commission corresponding to the administration of services of the transfer current accounts, which must be homologated to other financial entities that provide this service. The banking financial entity that receives transfer accounts may not charge additional commissions for this concept to non-banking financial entities." That in application of the Legal Reserve Regulation, the Monetary Operations Management (GOM), included in the tender carried out in the 2001 management for the award of the correspondent service, the corresponding form to collect the reference proposals of the financial entities, identified for each account (cash and securities) and currency (national, foreign, and national with value maintenance clause). That the lowest reference proposal for the service among the three awardees of the correspondent banking services tender was Bs 1,000 annually per account administered. That the Internal Communications of the Legal Affairs Management SAJU No. 785/2001 and SAJU No. 940/2001, establish that it is the attribution of the Board to determine the commission to be paid by the BCB and any modification of Board Resolution No. 088/2000. That Internal Communication GAL No. 086/2001 establishes that the start date for the payment of commissions arising from the administration of transfer current accounts to banking entities must be the date of entry into force of the Legal Reserve Regulation. That in the Reports from the Financial Entities Management GEF – SOPI No. 258/2001 and GEF-SOPI No. 261/2001, several alternatives are proposed for the BCB Board to define the amount of the commission to be honored by the BCB from May 4, 1998, to June 30, 2001, to non-correspondent banks. Likewise, it states that starting in July 2001, the BCB should cancel the commission including correspondent banks that administer transfer current accounts. That in accordance with the powers conferred by articles 7, 8, and 54 subsections a), i), and o) of Law 1670, the BCB Board is authorized to issue

//4. B.R. No. 071/2001 AND THEREFORE, THE BOARD OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- Fix the commission to be paid to banks for the administration of Transfer Current Accounts of non-bank entities for purposes of transfer and deposit of the reserve to the BCB, in the annual sum of Bs 1,000.- (one thousand 00/100 bolivianos), per account administered. Article 2.- Instruct the Administration to regularize the payment of the commission indicated in Article 1 of this Resolution for the periods elapsed between May 4, 1998, and June 30, 2001, to banking entities that, not being correspondent banks of the BCB, provided the service of administration of Transfer Current Accounts of the legal reserve to the Bank Central, charged to budget item 253100 – Commissions and Bank Expenses. Article 3.- Authorize the Administration to pay the annual commission starting July 1, 2001, to all banking entities that administer Transfer Current Accounts to the BCB of the legal reserve of non-bank entities. Article 4.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution. La Paz, July 31, 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.