Resolution 081/2002

RESOLUTION OF THE BOARD OF DIRECTORS NO. 081/2002

SUBJECT: FINANCIAL ENTITIES MANAGEMENT - APPROVES MODIFICATIONS TO THE REGULATIONS ON LIQUIDITY CREDITS TO ENTITIES OF THE FINANCIAL INTERMEDIATION SYSTEM.

HAVING SEEN:

Law 1670 of the Central Bank of Bolivia of October 31, 1995.

Board of Directors Resolution No. 088/2000 of November 28, 2000 and its subsequent modifications.

Board of Directors Resolution No. 033/2002 of April 2, 2002, which approves the Regulations on Liquidity Credits to Entities of the Financial Intermediation System.

Board of Directors Resolution No. 079/2002 of July 23, 2002, which approves Modifications to the Legal Reserve Regulations.

The Report from the Financial Entities Management 214/2002 of July 29, 2002.

The Report from the Legal Affairs Management SANO No. 151/2002 of July 30, 2002.

CONSIDERING:

That Article 36 of Law 1670 authorizes the BCB to attend to the temporary liquidity needs of entities in the financial intermediation system.

That the BCB, through Board of Directors Resolution No. 033/2002, has approved the Regulations on Liquidity Credits to Entities of the Financial Intermediation System.

That Article 9 of the aforementioned Regulations establishes that with the resources of the credit, the requesting entity must cancel existing loans received under the second tranche of liquidity guaranteed by the RAL Fund; likewise, it may not use this second tranche while the liquidity credit is in effect.

That Article 2 of Board of Directors Resolution No. 079/2002 temporarily modifies the term and grants the possibility of renewal for liquidity loans guaranteed by the second tranche of the RAL Fund.

That it is necessary to harmonize the rules established in the regulations on liquidity credits and legal reserves.

That the national financial system, in the last month, has registered a significant contraction of obligations with the public, requiring prompt and agile operations for the provision of liquidity from the BCB to the financial intermediation system.

That the Financial Entities Management, in its Report GEF 214/2002, recommends making temporary modifications to the Regulations on Liquidity Credits to Entities of the Financial Intermediation System.

That the Legal Affairs Management, in its report SANO No. 151/2002, states that in accordance with Article 54, items a) and q), it corresponds to the Board of Directors of the BCB to consider the approval of modifications to the liquidity credit rules.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Temporarily repeal, until October 27, 2002, Article 9 (Cancellation of the second tranche of the RAL Fund) of the Regulations on Liquidity Credits to Entities of the Financial Intermediation System.

Article 2.- Modify the first paragraph of Article 18 of the Regulations on Liquidity Credits to Entities of the Financial Intermediation System, as follows.

SAYS: Article 18.- (Acceptable Assets by the BCB).

Liquidity credits implemented through repurchase operations with securities from public or private issuers other than the TGN or BCB, shall be carried out with the following assets owned by the bank requesting the credit and in the following order of preference:

SHOULD SAY: “Article 18.- (Acceptable Assets by the BCB).

Liquidity credits implemented through repurchase operations with securities from public or private issuers other than the TGN or BCB, shall be carried out with the following assets owned by the financial intermediation entity requesting the credit and in the following order of preference:”

Article 3.- Modify the first paragraph of Article 19 of the Regulations on Liquidity Credits to Entities of the Financial Intermediation System, as follows.

SAYS: Article 19.- (Application)

Banking entities must submit their application to the Presidency of the BCB, justifying the need for liquidity. The application must be accompanied by the documentation detailed below, duly signed by their legal representatives:

SHOULD SAY: “Article 19.- (Application)

Financial intermediation entities must submit their application to the Presidency of the BCB, justifying the need for liquidity. The application must be accompanied by the documentation detailed below, duly signed by their legal representatives:”

Article 4.- Modify item b) of Article 19 of the Regulations on Liquidity Credits to Entities of the Financial Intermediation System, as follows.

SAYS: b) Business plan, which includes actions to overcome the illiquidity situation within a period not exceeding 90 days.

SHOULD SAY: “b) Liquidity management plan, which includes actions to overcome the illiquidity situation within a period not exceeding 90 days.”

Article 5.- Modify item c) of Article 20 of the Regulations on Liquidity Credits to Entities of the Financial Intermediation System, as follows.

SAYS: c) 85% of the present value of Fixed-Term Deposits from other banking entities classified in Category III of the Regulations on Control of Patrimonial Sufficiency and Asset Weighting issued by the SBEF will be considered. The premium rate will correspond to that of repurchases with TGN and BCB securities for 90 days, according to the corresponding currency, established by the COMA plus 150 (one hundred fifty) basis points.

SHOULD SAY: “c) 85% of the present value of Fixed-Term Deposits from other financial intermediation entities classified in Category III of the Regulations on Control of Patrimonial Sufficiency and Asset Weighting issued by the SBEF will be considered. The premium rate will correspond to that of repurchases with TGN and BCB securities for 90 days, according to the corresponding currency, established by the COMA plus 150 (one hundred fifty) basis points.”

Article 6.- These modifications shall enter into force on August 1, 2002.

Article 7.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, July 30, 2002

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Juan Antonio Morales A.

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Juan Medinaceli V. Armando Méndez M.

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Roberto Camacho S. Javier Comboni S. Enrique Ackermann A.