Resolution 130/2010

BOARD RESOLUTION NO. 130/2010
SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES AMENDMENT TO THE LEGAL RESERVE REGULATION.

HAVING SEEN:
The 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.
The Report from the Main Economic Policy Advisory and the Financial Entities Management BCB-APEC-SSIEE-INF-2010-47 / BCB-GEF-SANA-DAN-INF-2010-56 of November 19, 2010.
The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2010-383 of November 19, 2010.

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 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 specific regulations. 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.

//2. B.D. No. 130/2010
That the Legal Reserve Regulation aims to establish the technical and operational conditions, mandatory for financial entities duly authorized for operation by the Supervisory Authority of the Financial System, regarding the constitution and form of administration of the legal reserve. That the Economic Policy Advisory and the Financial Entities Management through Report BCB-APEC-SSIEE-INF-2010-47 / BCB-GEF-SANA-DAN-INF-2010-56, recommend the approval of the increase in additional reserve in foreign currency (M/E) to 50%. That according to Report BCB-GAL-SANO-INF-2010-383, the Legal Affairs Management concludes that the proposal to modify article 9 of the Legal Reserve Regulation is legally appropriate, as it does not contravene the current legal framework, being within 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 normative rules of general application, and internal rules, being authorized to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies, and faculties assigned by Law to the Issuing Entity, as established in articles 44 and 54 item 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 5 (Legal Reserve Rates) of the Legal Reserve Regulation as follows:

SAYS:
Article 5 (Legal Reserve Rates).- The legal reserve rates on the liabilities detailed in article 3 of this Regulation are the following:
In National Currency (MN) and National Currency Non-Financial Value (MNUFV):
Two percent (2%) for cash reserve
Ten percent (10%) for securities reserve
In Foreign Currency (ME) and Foreign Currency Deposits (MVDOL):
Two percent (2%) for cash reserve
Twelve percent (12%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on accounts included in "Other Obligations with the public and with companies with state participation" indicated in article 3 of the present Regulation.

MUST SAY:
“Article 5 (Legal Reserve Rates).- The legal reserve rates on the liabilities detailed in article 3 of this Regulation are the following:
In National Currency (MN) and National Currency Non-Financial Value (MNUFV):
Two percent (2%) for cash reserve
Ten percent (10%) for securities reserve
In Foreign Currency (ME) and Foreign Currency Deposits (MVDOL):
Three point five percent (3.5%) for cash reserve Twelve percent (12%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on accounts included in "Other Obligations with the public and with companies with state participation" indicated in article 3 of the present Regulation.”

Article 2.- Approve the partial modification to article 9 (Additional Reserve Rates) of the Legal Reserve Regulation as follows:

SAYS:
Article 9 (Additional Reserve Rates).- Financial entities included in article 1 of this Regulation must constitute an additional legal reserve in foreign currency securities applying a rate of 30% to the Additional Reserve Base (ARB).
The additional reserve requirement will be calculated as the average of daily balances of additional reserve.

MUST SAY:
“Article 9 (Additional Reserve Rates).- Financial entities included in article 1 of this Regulation must constitute an additional legal reserve in foreign currency securities applying a rate of 45% to the Additional Reserve Base (ARB).

//4. B.D. No. 130/2010
The additional reserve requirement will be calculated as the average of daily balances of additional reserve.”

Article 3.- The modification to the Legal Reserve Regulation will enter into force as of December 13, 2010, for banking entities. For non-banking entities, an adaptation period of three months is established, with the regulation entering into force as of March 7, 2011.

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, November 23, 2010

---

Marcelo Zabalaga Estrada

_________________________ _________________________ Rolando Marín Ibáñez Gustavo Blacutt Alcalá

_________________________ _________________________ Ernesto Yáñez Aguilar Rafael Boyán Téllez