Regulatory Alerts2000-10-24 | Resolución 078/2000Added · Updated
Resolution 078/2000
Article 10 of the Internal Regulations for Operations through the ALADI Reciprocal Payments and Credits Convention is amended to redefine the guarantee requirements for non-EFA authorized entities. The required Stand By Letter of Credit must now cover the value of issued and pending payment instruments plus the amount requested for new instruments, capped by the maximum debt limit in Article 22. Alternatively, entities may deposit US-denominated Treasury Bills or Bonds as collateral, valued at 90% of their nominal value, to secure these obligations.
BOARD RESOLUTION NO. 078/2000 SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT - APPROVES MODIFICATION OF ARTICLE 10 OF THE INTERNAL REGULATIONS FOR OPERATIONS THROUGH THE ALADI RECIPROCAL PAYMENTS AND CREDITS CONVENTION.
HAVING SEEN: Law 1670 of October 31, 1995. Board Resolution No. 099/99 of November 23, 1999, which approves the new Internal Regulations for Operations through the ALADI Reciprocal Payments and Credits Convention. Board Resolution No. 018/2000 of March 21, 2000, which approves modifications to Article 10 of the Internal Regulations for Operations through the CPCR-ALADI. Report GOI No. 008/2000 from the International Operations Management of October 23, 2000. Report SANO No. 210/2000 from the Legal Affairs Management of October 23, 2000.
CONSIDERING: That Article 10 of the Internal Regulations for Operations through the ALADI Reciprocal Payments and Credits Convention (CPCR) establishes that those entities that are not authorized as EFAs may request their inclusion in the list of institutions authorized to channel operations through the Convention, within the limits of the Internal Regulations, having to deliver in favor of the Central Bank of Bolivia a Stand By Letter of Credit, issued by a financial institution with a rating of at least Aa3 according to Moody’s Investors Services for an amount equivalent to 60% of the entity's Accounting Equity.
//2. B.R. No. 078/2000 That according to the Report from the International Operations Management, the amount of the guarantee to be requested from entities wishing to operate under the ALADI Convention with a Stand By Letter of Credit must be equal to the amount of payment instruments already issued and new instruments requested by the financial entity to operate in the CPCR-ALADI.
That the International Operations Management additionally recommends accepting an alternative guarantee constituted by General Treasury Bills of the Nation and Treasury Bonds from entities in the financial system not authorized as EFAs that wish to join the list of institutions authorized to operate in the CPCR-ALADI, for which Article 10 of the aforementioned Internal Regulations must be modified.
That according to Report SANO No. 210/2000 from the Legal Affairs Management, there is no legal impediment for the Board of Directors of the BCB to approve the modification to Article 10 of the Internal Regulations for operations through the ALADI Reciprocal Payments and Credits Convention.
THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Modify Article 10 of the Internal Regulations for Operations through the ALADI Reciprocal Payments and Credits Convention, in the following terms:
SAYS: Article 10 (Authorization as Authorized Institution) Banking system entities that are authorized as EFAs, according to what is provided by BCB Board Resolutions No. 117/97 of July 10, 1997 and No. 056/99 of July 6, 1999, must request the express authorization of the Bank, through the International Operations Management, in order to be included in the list of institutions authorized to channel operations through the Convention.
Those entities that are not authorized as EFAs may request their inclusion in the list of institutions authorized to channel operations through the Convention, within the limits of these Regulations. To do so, they must previously deliver in favor of the Central Bank of Bolivia a Stand By Letter of Credit, issued by a financial institution with a rating of at least Aa3 according to Moody’s Investors Services and from a country with a similar or higher rating for its sovereign debt, for an amount equivalent to 60% of the entity's Accounting Equity at the date of issuance of the letter of credit. In the event that the entity does not have sufficient funds in its bank accounts to meet its obligations according to these Regulations, the Stand By Letter of Credit will be immediately enforced for the amount of the pending payment obligation, including interest calculated at the LIBOR rate plus four percentage points.
//3. B.R. No. 078/2000 SHOULD SAY: “Banking system entities that are authorized as EFAs, according to what is provided by BCB Board Resolution No. 038/2000 of June 20, 2000, must request the express authorization of the Bank, through the International Operations Management, in order to be included in the list of institutions authorized to channel operations through the Convention.
Those entities that are not authorized as EFAs may request their inclusion in the list of institutions authorized to channel operations through the Convention, within the limits of these Regulations. To do so, they must previously deliver in favor of the Central Bank of Bolivia, a Stand By Letter of Credit issued by a financial institution with a rating of at least Aa3 according to Moody’s Investors Services and from a country with a similar or higher rating for its sovereign debt, for an amount equivalent to the payment instruments issued and pending payment plus the amount expressly requested by the entity to issue new payment instruments, which together must not exceed the maximum debt limit established in Article 22.
In the event that an entity not authorized as an EFA fails to meet its obligations with the Bank arising from these Regulations, the Stand By Letter of Credit will be immediately enforced to cover the payment of its pending obligations, the interest for insufficient funds established in Article 18 of these Regulations, and the value of all new payment instruments issued.
//4. B.R. No. 078/2000 Alternatively, the entity not authorized as an EFA may endorse to the name of the Bank and deposit in custody with the same, General Treasury Bills of the Nation (LTs) and/or Treasury Bonds (BTs) denominated in United States dollars as collateral, for an amount equivalent to the payment instruments issued and pending payment plus the amount expressly requested by the entity to issue new payment instruments, which together must not exceed the maximum debt limit established in Article 22. The LTs and BTs will be calculated at 90% of their nominal value.
In the event that an entity not authorized as an EFA fails to meet its obligations with the Bank arising from these Regulations, the early redemption of the LTs and/or BTs deposited as collateral will be carried out to cover the payment of its pending obligations, the interest for insufficient funds established in Article 18 of these Regulations, and the value of all new payment instruments issued. The early redemption of the values deposited as collateral will be carried out in the modality defined by the Open Market Operations Committee for this purpose.”
Article 2.- This Resolution will enter into force from November 1, 2000.
Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.
La Paz, October 24, 2000.
Armando Pinell S.
Jaime Ponce G. Juan Medinaceli V.
Fernando Campero P. Armando Méndez M.