Resolution 072/2011 Approving Modification to the Legal Reserve Regulation

BOARD RESOLUTION NO. 072/2011 SUBJECT: MAIN ADVISORY OFFICE FOR ECONOMIC POLICY - APPROVES MODIFICATION TO THE LEGAL RESERVE REGULATION

SEEN: The current Political Constitution of the State promulgated on February 7, 2009. Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB). The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005, and its subsequent modifications. The Legal Reserve Regulation approved by Board Resolution No. 070/2009 of June 23, 2009, and modified according to Board Resolution No. 130/2010 of November 23, 2010, and Board Resolution No. 007/2011 of January 18, 2011. The report from the Main Advisory Office for Economic Policy BCB-APEC-SSIEE-INF-2011-37 and from the Financial Entities Management BCB-GEF-SANA-DAN-INF-2011-55 of June 10, 2011. The report from the Legal Affairs Management BCB-GAL-SANO-INF-2011-212 of June 10, 2011.

CONSIDERING: That the Political Constitution of the State in its article 328 provides that the BCB is authorized, in coordination with the economic policy determined by the Executive Branch, to determine and execute monetary policy. That Law No. 1670 in its article 7 provides that the Issuing Entity may establish legal reserves of mandatory compliance for financial intermediation entities and, for this purpose, will determine their composition, amount, calculation method, characteristics, and remuneration. That in its article 37, the aforementioned legal norm establishes that the BCB is the custodian of the liquid reserves intended to cover said reserve and may delegate the custody of these deposits according to the specific regulation.

//2. B.D. No. 072/2011 That the BCB Statute in article 11 numeral 7), states that it is the faculty of the Board to establish by absolute majority of votes, legal reserves of mandatory compliance by Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration according to Regulation. That the Legal Reserve Regulation has the object of establishing the technical and operational conditions, of mandatory compliance for financial entities that are duly authorized for their operation by the Financial System Supervision Authority, regarding the constitution and form of administration of the legal reserve. That the Main Advisory Office for Economic Policy through report BCB-APEC-SSIEE-INF-2011-37 and from the Financial Entities Management BCB-GEF-SANA-DAN-INF-2011-55, recommends the approval of the partial modification of article 6 of the Legal Reserve Regulation. That according to report BCB-GAL-SANO-INF-2011-212 the Legal Affairs Management concludes that the proposed modification indicated is legally appropriate, since it does not contravene the current legal framework, being the competence of the BCB Board to consider its approval. That, the BCB Board in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized regulations of general application, and internal norms, being authorized to issue norms and adopt general decisions that were necessary for the fulfillment of the functions, competencies, and faculties assigned by Law to the Issuing Entity, as established in articles 44 and 54 inc. o) of Law No. 1670 and articles 9, 11, and 24 of the BCB Statute.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- Approve the partial modification to article 6 (Deductions and exemptions from reserve) of the Legal Reserve Regulation as follows: IT SAYS: From the reserve required in NC and NCUFV, the increase in the gross portfolio in NC and NCUFV with respect to the balance registered on June 30, 2009, may be deducted up to the equivalent to 100% of the reserve required in cash in the first instance and, subsequently, up to the equivalent to 40% of the reserve required in securities. This deduction will apply only to deposits subject to the reserve rate of 2% in cash and 10% in securities according to article 5 of this Regulation. For financial entities that obtain their operating license from the ASFI after June 30, 2009, the date that will be used for the calculation of the increase in the gross portfolio in NC and UFV will correspond to the last day of the month in which the entity obtained the said license. Short-term liabilities with the exterior, contracted exclusively for foreign trade operations with exact matching between asset and liability for each operation, will be exempt from the requirement to constitute legal reserve.

SHOULD SAY: “From the reserve required in NC and NCUFV, Banks and Private Financial Funds may deduct the increase in the gross portfolio destined to the productive sector in NC and NCUFV with respect to the balance registered on September 30, 2010, up to the equivalent to 100% of the reserve required in cash in the first instance and, subsequently, up to the equivalent to 40% of the reserve required in securities. For the deduction of the productive portfolio, the last information collected by the Financial System Supervision Authority will be applied. From the reserve required in NC and NCUFV, Mutuals and Cooperatives may deduct the increase in the total gross portfolio in NC and NCUFV with respect to the balance registered on September 30, 2010, up to the equivalent to 100% of the reserve required in cash in the first instance, and subsequently, up to the equivalent to 40% of the reserve required in securities. These deductions will apply only to deposits subject to the reserve rate of 2% in cash and 10% in securities according to article 5 of this Regulation. For financial entities that obtain their operating license from the ASFI after September 30, 2010, the date that will be used for the calculation of the increase in the total gross portfolio (for Mutuals and Cooperatives) or productive (for Banks and Private Financial Funds), in NC and UFV will correspond to the last day of the month in which the entity obtained the said license. Short-term liabilities with the exterior, contracted exclusively for foreign trade operations with exact matching between asset and liability for each operation, will be exempt from the requirement to constitute legal reserve.”

Article 2.- The partial modification of article 6 of the legal reserve regulation will enter into force from July 11, 2011.

//4. B.D. No. 072/2011 Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution. La Paz, June 14, 2011

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Marcelo Zabalaga Estrada

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Rolando Marín Ibáñez Hugo Dorado Araníbar

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Ernesto Yáñez Aguilar