Regulatory Alerts2007-12-11 | Resolución 156/2007Added · Updated
Resolution 156/2007
The Central Bank of Bolivia amends the Legal Reserve Regulation to reduce reserve requirements for domestic currency time deposits (DPF) and adjust the calculation of the Additional Reserve Base. Specifically, Article 2 modifies the Additional Reserve Base (BEA) schedule, setting the reserve percentage at 30% from February 11 to June 29, 2008, and 0% from June 30, 2008. Article 4 changes the reserve application for DPFs denominated in national currency and UFV-maintained national currency, requiring reserves for maturities of 30 to 360 days while maintaining no reserve requirements for maturities exceeding 360 days. These modifications enter into force on February 25, 2008.
BOARD RESOLUTION NO. 156/2007 SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES MODIFICATIONS TO THE LEGAL RESERVE REGULATION
HAVING SEEN:
Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia. 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 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 renders ineffective the provisions of Article 20 (Transfer Reserve Accounts for Non-Bank Entities) of the Legal Reserve Regulation. The Technical Report from the Economic Policy Advisory APEC-INEP-039/2007 of December 14, 2007. The Report from the Legal Affairs Management SANO No. 327/2007 of December 14, 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, shall determine their composition, amount, calculation method, characteristics, and remuneration.
That in its Article 37, the aforementioned legal norm establishes that the Central Bank of Bolivia 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 Statute of the Central Bank of Bolivia 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 approved by Board Resolution No. 048/2005 establishes an additional reserve in foreign currency titles applied to the Additional Reserve Base (BEA).
That the modification to the Legal Reserve Regulation, approved by Board Resolution No. 118/2006, defines the Additional Legal Reserve Base (BEA) as the difference between Foreign Currency and MVDOL Obligations Subject to Additional Reserve (OSEA-ME) and 60% of the OSEA-ME from the base date from July 2, 2007.
That the Economic Policy Advisory through Technical Report APEC-INEP-039/2007, recommends the modification of the Legal Reserve Regulation, in order to regulate liquidity contributing to neutralize inflationary pressures and deepen the capture of deposits in national currency.
That the Legal Affairs Management through Report SANO No. 327/2007, states that there is no legal impediment for the Board of the Issuing Entity, in exercise of its faculties provided for in Law No. 1670, to consider the approval of the modifications to the Legal Reserve Regulation.
That the Board considers it convenient to modify the Legal Reserve requirements for deposits up to 360 days and cash in National Currency and National Currency with UFV Maintenance as stated in Article 4 of the Legal Reserve Regulation.
THEREFORE,
THE BOARD 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 OSEA-ME and a percentage of OSEA-ME from 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 60%
SHOULD SAY: Additional Reserve Base (BEA): Corresponds to the difference between OSEA-ME and a percentage of OSEA-ME from 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 0%
Article 2.- Approve the modification of Article 4 Applications and Exemptions of Reserve for DPF of the Legal Reserve Regulation as follows:
SAYS: Article 4 (Applications and Exemptions of Reserve for DPF).
The legal reserve requirements for DPF, according to terms and denominations, are established in the following table:
LEGAL RESERVE FOR DPF* ACCORDING TO MATURITY TERM AND DENOMINATION
NATIONAL CURRENCY AND MNUFV | FOREIGN CURRENCY AND MVDOL ORIGINAL TERM OF DPF | Reserve in Titles | Reserve in Cash | Reserve in Titles | Reserve in Cash 30 to 60 days | No reserve | Reserves | Over 60 days Up to 360 days | No reserve | No reserve | Reserves | Reserves Over 360 days Up to 720 days | No reserve | No reserve | Reserves | No reserve Over 720 days | No reserve | No reserve | No reserve | No reserve
*Only time deposits of 30 days or more are considered DPF.
Short-term liabilities with the exterior, contracted exclusively for foreign trade operations with exact matching between asset and liability for each operation, will be exempt from the requirement to establish legal reserves.
SHOULD SAY: “Article 4 (Applications and Exemptions of Reserve for DPF).
The legal reserve requirements for DPF, according to terms and denominations, are established in the following table:
LEGAL RESERVE FOR DPF* ACCORDING TO MATURITY TERM AND DENOMINATION
NATIONAL CURRENCY AND MNUFV | FOREIGN CURRENCY AND MVDOL ORIGINAL TERM OF DPF | Reserve in Titles | Reserve in Cash | Reserve in Titles | Reserve in Cash 30 to 60 days | Reserves | Over 60 days Up to 360 days | Reserves | Over 360 days Up to 720 days | No reserve | No reserve | Reserves | No reserve Over 720 days | No reserve | No reserve | No reserve | No reserve
*Only time deposits of 30 days or more are considered DPF.
Short-term liabilities with the exterior, contracted exclusively for foreign trade operations with exact matching between asset and liability for each operation, will be exempt from the requirement to establish legal reserves.”
Article 3.- The modification to the Legal Reserve Regulation will enter into force from February 25, 2008.
Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.
La Paz, December 18, 2007
Raúl Garrón Claure
Gustavo Blacutt Alcalá
Hugo Dorado Araníbar
Rolando Marín Ibáñez
Ernesto Yáñez Aguilar
Osvaldo Nina Baltazar
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