Regulatory Alerts2008-12-09 | Resolución 143/2008Added · Updated
Resolution 143/2008
The Board of Directors of the Central Bank of Bolivia amends Articles 2, 9, and 10 of the Legal Reserve Regulation to simplify the calculation of additional legal reserves on foreign currency deposits. The modification establishes a fixed reserve rate of 30% applied to the Additional Reserve Base and sets the base date for calculations to September 30, 2008. These changes replace previous variable rate schedules and complex deduction mechanisms with a straightforward average daily balance calculation. The amendments enter into force on January 26, 2009, and apply to authorized financial intermediation entities.
BOARD RESOLUTION NO. 143/2008
SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT – APPROVES MODIFICATIONS TO THE LEGAL RESERVE REGULATION.
HAVING SEEN:
Law No. 1670 of October 31, 1995.
The Statute of the Central Bank of Bolivia of October 21, 2005.
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 the partial modification to Article 2 (Terms and Abbreviations) of the Legal Reserve Regulation.
Board Resolution No. 106/2007 of August 21, 2007, which approves the partial modification to Articles 11 (Legal Reserve Cash Accounts) and 14 (Reporting of Liabilities Subject to Legal Reserve), and which renders ineffective the provisions of Article 20 (Transfer Reserve Accounts for Non-Bank Entities) of the Legal Reserve Regulation.
Board Resolution No. 156/2007 of December 18, 2007, which approves the partial modification of Articles 2 (Terms and Abbreviations) and 4 (Applications and Exemptions of Reserve for DPFs).
The Joint Report of the Main Economic Policy Advisory and the Financial Entities Management APEC-INEP 047/2008 GEF 797/2008 of December 4, 2008.
The Report of the Legal Affairs Management SANO No. 351/2008 of December 5, 2008.
CONSIDERING:
That Law No. 1670 in its Article 7 provides that the Issuing Entity may establish legal reserves of mandatory compliance for financial intermediation entities and, for this purpose, will determine their composition, amount, method of calculation, 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 the 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, legal reserves of mandatory compliance by Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration according to Regulation.
That the Legal Reserve Regulation and all its modifications have as their object to establish the technical and operational conditions, of mandatory compliance for financial entities that are duly authorized for their operation by the Superintendence of Banks and Financial Entities, regarding the constitution and form of administration of the legal reserve.
That the Economic Policy Advisory and the Financial Entities Management through Report APEC-INEP 047/2008 GEF 797/2008, recommend the approval of modifications to the Legal Reserve Regulation, in order to increase the additional requirement for new deposits in foreign currency, which allow reducing risks in the financial system and the economy, strengthening the capacity of the Issuing Entity as lender of last resort.
That the Legal Affairs Management through Report SANO No. 351/2008, 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 the modifications to the Legal Reserve Regulation.
That in merit to the attributions conferred in the subsections a), i), o) and q) of Article 54 of Law No. 1670, the Board of the BCB is authorized to approve the modifications to the new 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 in the following manner:
SAYS:
Additional Reserve Base (BEA): Corresponds to the difference between the 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 February 11, 2008 and June 29, 2008 30% From June 30, 2008 onwards 0%
SHOULD SAY:
Additional Reserve Base (BEA): Corresponds to the difference between the OSEA-ME and the OSEA-ME of the base date.
Article 2.- Approve the modification to Article 9 (Additional Reserve Rates and Compensation) of the Legal Reserve Regulation in the following manner:
SAYS:
Article 9 (Additional Reserve Rates and Compensation).
The financial entities included in Article 1 of this Regulation must constitute an additional legal reserve in foreign currency titles by applying to the Additional Reserve Base (BEA) the rate defined in the following schedule:
Period Rate Between 06/06/05 and 11/09/05 2.50% Between 12/09/05 and 18/12/05 5.00% From 19/12/05 onwards 7.50%
The additional reserve in titles, referred to in the previous paragraph, may be decreased based on the growth of OPC-MN. The deduction will be determined by applying to the Additional Reserve Compensation Base (BCEA) a compensation rate that will be equal to the one applied for additional reserve, according to the schedule established in the previous table.
The additional reserve requirement will be calculated as the difference between the average of daily additional reserve balances and the average of daily deductions registered by each entity in the reserve requirement period.
In the event that the calculation of the additional reserve requirement generates a positive figure, this requirement will be added to the OSE reserve requirements. Otherwise, the additional reserve requirement will be zero.
SHOULD SAY:
Article 9 (Additional Reserve Rates).
The financial entities included in Article 1 of this Regulation must constitute an additional legal reserve in foreign currency titles by applying a rate of 30% to the Additional Reserve Base (BEA).
The additional reserve requirement will be calculated as the average of daily additional reserve balances.
Article 3.- Approve the modification to Article 10 (Base Date) of the Legal Reserve Regulation in the following manner:
SAYS:
Article 10 (Base Date).
The base date mentioned in Article 2 of this Regulation and used for the application of the additional reserve and the deduction established in Article 9 of this Regulation is March 31, 2005.
SHOULD SAY
Article 10 (Base Date).
The base date mentioned in Article 2 of this Regulation and used for the application of the additional reserve established in Article 9 of this Regulation is September 30, 2008.
Article 4.- The modifications to the Legal Reserve Regulation will enter into force from January 26, 2009.
Article 5.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.
La Paz, December 9, 2008
Gabriel Loza Tellería
Gustavo Blacutt Alcalá Hugo Dorado Araníbar
Rolando Marín Ibáñez Ernesto Yáñez Aguilar
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