Resolution 106/2007

BOARD RESOLUTION NO. 106/2007
SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES MODIFICATIONS TO THE LEGAL RESERVE REGULATION

HAVING SEEN:
Law No. 1670 of October 31, 1995.
The Statute of the BCB, approved by Board Resolution No. 128/2005 of October 21, 2005, and its modification approved by Board Resolution No. 031/2006 of April 18, 2006.
Board Resolution No. 048/2005 of April 20, 2005, which approves the Legal Reserve Regulation.
Board Resolution No. 118/2006 of December 12, 2006, which approves modifications to the Legal Reserve Regulation.
The Technical Report from the Economic Policy Advisory APEC-INEP 019/2007 of August 17, 2007.
The Report from the Legal Affairs Management SANO No. 198/2007 of August 20, 2007.

CONSIDERING:
That Law No. 1670 in its article 7 provides that the Issuing Entity may establish mandatory legal reserves 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 a specific regulation.

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, mandatory legal reserves for Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration in accordance with the Regulation.

That the Legal Reserve Regulation establishes that only non-bank entities authorized by the SBEF with public liabilities above UFV 600 million will maintain a single account called "reserve account" in each of the four denominations (MN, MNUFV, MVDOL, and ME) and that other entities must use the "transfer reserve account."

That the Economic Policy Advisory through Technical Report APEC-INEP 019/2007 of August 17, 2007 recommends modifying the Legal Reserve Regulation to promote the participation of non-bank financial entities in the High-Value Payment System.

That the Legal Affairs Management through Report SANO No. 198/2007, states that there is no legal impediment for the Board of the Issuing Entity, in the exercise of its faculties, to consider the approval of modifications to the Legal Reserve Regulation.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the partial modification to article 11 (Legal Reserve Cash Accounts) of the Legal Reserve Regulation as follows:

SAYS:
Bank entities will maintain at the BCB a single account called "current and reserve account" in each of the four denominations (national currency, MNUFV, MVDOL, and foreign currency).

Non-bank entities authorized by the SBEF, which in the last 6 months, on average, had registered public liabilities above UFV 600 million, will maintain at the BCB a single account called "reserve account" in each of the four denominations (national currency, MNUFV, MVDOL, and foreign currency) and on which checks cannot be drawn. For cash withdrawal from this account at BCB counters, the procedures established by the Issuing Entity will be followed.

Bank entities must constitute the cash reserve in the current and reserve account. Non-bank entities must do so in the reserve account or in the account enabled for this purpose in bank entities. These accounts will not be subject to any type of judicial attachment or retention by third parties.

The legal cash reserve must be constituted: (i) in national currency, for deposits in the same currency, (ii) in national currency at the equivalent value in UFV, for deposits in MNUFV (iii) in national currency at the equivalent value in MVDOL, for deposits in MVDOL and (iv) in US dollars, for deposits in foreign currency.

SHOULD SAY:
"Bank entities will maintain at the BCB a single account called 'current and reserve account' in each of the four denominations (national currency, MNUFV, MVDOL, and foreign currency).

Non-bank entities authorized by the SBEF will maintain at the BCB a single account called 'reserve account' in each of the four denominations (national currency, MNUFV, MVDOL, and foreign currency) and on which checks cannot be drawn. For cash withdrawal from this account at BCB counters, the procedures established by the Issuing Entity will be followed.

Bank entities must constitute the cash reserve in the current and reserve account and non-bank entities must do so in the reserve account. These accounts will not be subject to any type of judicial attachment or retention by third parties.

The legal cash reserve must be constituted: (i) in national currency, for deposits in the same currency, (ii) in national currency at the equivalent value in UFV, for deposits in MNUFV (iii) in national currency at the equivalent value in MVDOL, for deposits in MVDOL and (iv) in US dollars, for deposits in foreign currency."

Article 2.- Approve the partial modification to article 14 (Reporting of Liabilities Subject to Legal Reserve) of the Legal Reserve Regulation as follows:

SAYS:
Financial entities must report daily the entirety of their liabilities subject to legal reserve, by denomination and by type of deposit through the financial information system and in accordance with what is established by SBEF regulations. The report will correspond to the liabilities subject to legal reserve of the previous business day.

Cash deposits at the BCB or its correspondents and transfers of reserve accounts will be subject to the schedules established by the BCB.

SHOULD SAY
"Financial entities must report daily the entirety of their liabilities subject to legal reserve, by denomination and by type of deposit through the financial information system and in accordance with what is established by SBEF regulations. The report will correspond to the liabilities subject to legal reserve of the previous business day.

Cash deposits at the BCB or its correspondents will be subject to the schedules established by the BCB."

Article 3.- Repeal article 20 (Transfer Reserve Accounts for Non-Bank Entities) of the Legal Reserve Regulation approved by Board Resolution No. 048/2005 and modified by Board Resolution No. 118/2006.

Article 4.- The modifications to the Legal Reserve Regulation will enter into force starting from September 10, 2007.

Article 5.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, August 21, 2007

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Raúl Garrón Claure

____________________________ __________________________ Gustavo Blacutt Alcalá Hugo Dorado Araníbar __________________________ __________________________ Rolando Marín Ibáñez Ernesto Yánez Aguilar __________________________ Osvaldo Nina Baltazar