Resolution 118/2006

BOARD RESOLUTION NO. 118/2006
SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES MODIFICATIONS TO THE NEW 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.
The Technical Report from the Economic Policy Advisory APEC-INEP-024/2006 of November 13, 2006.
The Report from the Legal Affairs Management SANO No. 268/2006 of December 4, 2006.

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 authority of the Board to establish, by absolute majority of votes, mandatory legal reserves for Financial Intermediation Entities and to approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration in accordance with the Regulation.

That the Legal Reserve Regulation approved by B.D. 048/2005 establishes an additional legal reserve in foreign currency titles applied to the Additional Reserve Base (BEA).

That the Economic Policy Advisory through Technical Report APEC – INEP 024/2006, of November 13, 2006, recommends the modification of the Legal Reserve Regulation, in order to deepen the collection of deposits in national currency and ensure the stability of the financial system.

That the Legal Affairs Management through Report SANO No. 268/2006, states that there is no legal impediment for the Board of the Issuing Entity, in the exercise of its powers, to consider the approval of the 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 2 (Terms and Abbreviations) of the Legal Reserve Regulation as follows:

SAYS:
Additional Reserve Base (BEA): Corresponds to the difference between the FOREIGN CURRENCY DEPOSITS (OSEA– ME) and eighty percent (80%) of the OSEA-ME of the base date.

SHOULD SAY:
Additional Reserve Base (BEA): Corresponds to the difference between the FOREIGN CURRENCY DEPOSITS (OSEA- ME) and a percentage of the OSEA-ME of the base date. This percentage will be adjusted according to the following schedule:

Period Percentage
Between January 15, 2007 and July 1, 2007 70%
From July 2, 2007 onwards 60%

Article 2.- The modification to the Legal Reserve Regulation will enter into force from January 14, 2007.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, December 12, 2006

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Enrique Ackermann Arguedas
________________________ _________________________ Hugo Dorado Aranibar Jorge Casso Echart _____________________ _____________________ Hugo Argote Argote Gustavo Blacutt Alcalá