Resolution 149/97 Approving the Regulation for Operations with Certificates of Deposit (CDs) of the Central Bank of Bolivia

BOARD RESOLUTION NO. 149/97 SUBJECT: CURRENCY AND CREDIT - APPROVES THE REGULATION FOR OPERATIONS WITH CERTIFICATES OF DEPOSIT (CDs) OF THE CENTRAL BANK OF BOLIVIA.

SEEN: The Law No. 1670 of October 31, 1995. The Statute of the Central Bank of Bolivia, approved by Board Resolution No. 082/97. Board Resolution No. 149/93 of December 7, 1993, which approves the Regulation for Operations with Certificates of Deposit (CDs) of the Central Bank of Bolivia. The Open Market Operations Regulation, approved by Board Resolution No. 102/97 of April 22, 1997. Technical Report No. 042/97 of August 27, 1997 from the Currency and Credit Management. Legal Report ALEG No. 126/97 of August 29, 1997 from the Main Legal Advisory.

CONSIDERING: That according to Article 6 of Law No. 1670, the Central Bank of Bolivia is authorized to execute monetary policy and regulate the quantity of money and the volume of credit in accordance with its monetary program, being able, for this purpose, to issue, place, and acquire securities and carry out other Open Market Operations.

That with the aim of regulating the liquidity of the economy, the stability of the purchasing power of the currency, and ensuring compliance with the monetary targets defined for each management period, it corresponds to the Central Bank of Bolivia to control the volume and composition of the available means of payment in the economy through Open Market Operations.

That due to the new legal-administrative structure of the CBB, it is necessary to adapt the regulations regarding Open Market Operations, among which is the Regulation for Operations with Certificates of Deposit of the Central Bank of Bolivia.

That the technical and legal reports recommend the approval of the aforementioned draft Regulation.

That Article 54, subsection d) of Law 1670, authorizes the Board of Directors of the Central Bank of Bolivia to issue norms for Open Market Operations.

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

Article 1.- Approve the attached Regulation for Operations with Certificates of Deposit of the Central Bank of Bolivia in its 5 chapters and 23 articles.

Article 2.- Repeal Board Resolution No. 149/93 of December 7, 1993, and any other provision contrary to the aforementioned Regulation.

Article 3.- The aforementioned Regulation shall enter into force on October 15, 1997.

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

9.IX.97

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Juan Antonio Morales A.

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Armando Pinell S.

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Jaime Ponce G.

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Juan Medinacelli V.

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Fernando Campero P.

REGULATION FOR OPERATIONS WITH CERTIFICATES OF DEPOSIT (CDs) OF THE CENTRAL BANK OF BOLIVIA

CHAPTER I OBJECT OF THE REGULATION AND CHARACTERISTICS OF THE CDs

Article 1 (Object). This instrument aims to regulate the administration and control of the issuance of Certificates of Deposit (CDs), and to establish the procedures for their auction, allocation, and redemption, under the provisions of the Open Market Operations Regulation, approved by B.R. 102/97 of April 22, 1997.

Article 2 (Characteristics of the CDs). CDs are short-term, credit-content, registered securities, issued at a discount by the Central Bank of Bolivia (CBB) and allocated through Competitive Public Auction, Money Desk, or other mechanisms authorized by the Open Market Operations Committee (COMA).

Article 3 (Issuance Currency). CDs are issued in national currency, national currency with value maintenance relative to the United States dollar (MVDOL), and in United States dollars, in denominations of one thousand units of the respective currencies.

Article 4 (Public Offer). For their public offer, CDs must be approved and registered by the Securities Superintendence.

CHAPTER II PUBLIC AUCTION

Article 5 (Call for Bids). The competitive public auction will be held at the CBB prior to a call, which will be published at least one business day in advance, mentioning the offered quantity of CDs by currency. The publication will be made in at least one written communication medium, without prejudice to the use of other means authorized by COMA.

Article 6 (Authorized Financial Entities). All financial entities enabled for operation by the corresponding Sectoral Superintendencies of the Financial Regulation System (SIREFI) that comply with the requirements of Article 16 of the Open Market Operations Regulation and those defined in this Regulation may participate in CD auctions.

Article 7 (Application). The application for participation in the auction must specify the legal name of the applicant, number of bids, and for each of them, discount rate, quantity of CDs, currency, term, form of payment, and other additional data according to the call.

The application must be submitted to the CBB up to 15 minutes before the time fixed for the opening of the auction session in one of the following forms:

In a closed envelope, with signatures of their legal representatives duly registered in the Sub-Management of Open Market Operations (SOMA).

Through the Open Market Operations Information System (SIOMA).

Any other means accepted by COMA.

SOMA will certify the time of receipt of the applications.

Article 8 (Provision of Funds). To participate in the auction, authorized entities must effect the provision of funds in one of the following forms:

a) Through written communication to the CBB authorizing the debit of their current account or their legal reserve account for their own operations or in favor of other authorized financial entities. This authorization may have indefinite character.

b) Through a deposit equivalent to 2% of the nominal value of the CDs demanded in the account named "Sale of CDs" of the CBB.

Article 9 (Acceptance of Terms and Conditions). With the submission of the application, the applicant is subject to the terms of this Regulation and those of the call, and may not withdraw their application after the deadline mentioned in Article 7.

Article 10 (Reading of Bids). In the public auction session, the number of applications and bids received will be announced, and the latter will be read without specifying the legal name of the applicants.

Article 11 (Grounds for Rejection). The following are grounds for rejection of applications:

a) Lack of provision of funds.

b) Incomplete, incorrect, contradictory, or incoherent information in the application.

CHAPTER III ALLOCATION AND SALE AT AUCTION

Article 12 (Allocation). The allocation of CDs in the auction will be carried out based on the rate proposed by each applicant and in ascending order, starting from the lowest discount rate until the offer is exhausted or the cut-off rate is reached.

If there is equality of discount rates between bids in the margin, they will be allocated pro rata until the offer is exhausted.

If in the margin for a single bid the demanded quantity is higher than the offered quantity, it will be allocated up to the exhaustion of the offer.

Article 13 (Effective Sale). The sale will be effective 48 hours after the allocation in the auction or in another period defined by COMA. Within this period, the allocatee must ensure the existence of sufficient funds in the following manner:

a) In one of the accounts mentioned in Article 8.

b) With matured securities issued by the CBB or the General Treasury of the Nation (TGN), endorsed in favor of the CBB.

c) Other modalities authorized by COMA.

Article 14 (Sanctions). If on the day of the sale, the allocatee does not have sufficient resources to effect the payment of the CDs, the CBB will consolidate in its favor, as a fine, 2% of their nominal value, without prejudice to other sanctions that COMA might determine.

Article 15 (Publication). The Currency and Credit Management of the CBB will publish the aggregated results of the auction, without specifying the legal name of the allocatees.

Article 16 (Commercial Year). The calculation of discount rates will be carried out taking as a base the commercial year of 360 days.

CHAPTER IV ISSUANCE, REGISTRATION, AND CUSTODY

Article 17 (Issuance). The CBB will issue a title for each sale carried out through auction, Money Desk, or other mechanisms authorized by COMA, with the characteristics and security requirements that back the issuance. The buyer must pay the cost of replacement of forms and custody established in the Table of Terms and Conditions for the Collection of Commissions and Other Incomes of the CBB.

Article 18 (Registration and Custody). The CBB will electronically register in SIOMA the name of the buyer of the CDs, as well as all transfers of ownership thereof. Additionally, the CBB may be custodian, in physical or electronic register, of the issued CDs.

Article 19 (Exchange Rate). Operations in MVDOL will be carried out at the CBB's prevailing purchase exchange rate on the date.

CHAPTER V REPLACEMENT, REDEMPTION, AND PRESCRIPTION

Article 20 (Replacement). In case of loss or misplacement of the CDs allocated by the CBB, their replacement will be carried out in accordance with the norms established in the Commercial Code.

Article 21 (Redemption). CDs are redeemed by the CBB on their maturity date after verification of the holder's ownership with the CBB's records and subject to the presentation of the title, when applicable. No interest will be recognized after the maturity date, nor will automatic renewal be accepted.

Article 22 (Prescription). Actions to collect CDs prescribe in favor of the State within a period of ten years from the date of their enforceability.

Article 23 (Transitory Provision). CDs issued prior to this Regulation are subject to the provisions that gave them origin, until their maturity.

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