Regulatory Alerts1997-10-14 | Resolución 156/97Added · Updated
Resolution 156/97 Approving Investment of International Gold Reserves
The Board of Directors of the Central Bank of Bolivia authorizes the investment of physical gold reserves currently held in the central vault into time deposits with a maximum term of four months. The Reserve Administration Committee must execute this investment through a schedule of up to 15 deposits, each limited to 2.5 tons, starting November 10, 1997, ensuring that at least 50% of the gold remains in the vault as London Good Delivery Bars. This resolution repeals Article 1 of Resolution 150/97, which previously capped external gold investments at 5% of total reserves, and mandates monthly reporting on the investment schedule and returns.
BOARD RESOLUTION NO. 156/97 SUBJECT: INTERNATIONAL AFFAIRS - APPROVES INVESTMENT OF INTERNATIONAL RESERVES IN GOLD.
VIEWING: Law No. 1670 of October 31, 1995, Chapter II, regarding the functions of the BCB in relation to International Reserves. Board Resolution No. 080/97 of February 18, 1997, which approves the Regulations for the Administration of International Reserves. Board Resolution No. 150/97 of September 9, 1997, which establishes the maximum limit for investments in gold abroad. Report SRDE No. 040/97 from the International Affairs Management of October 2, 1997. Report ALEG No. 160/97 from the Main Legal Advisory of October 10, 1997.
CONSIDERING: That according to Law 1670, physical gold forms part of the BCB's International Reserves. That in accordance with the aforementioned legal provision, the Central Bank of Bolivia is authorized to administer and manage its International Reserves, being able to invest them, dispose of them, and deposit them in custody, in the manner it considers most appropriate for the fulfillment of its object and functions, except for the pledge of gold which requires legislative approval. That the Regulations for the Administration of International Reserves stipulate that the BCB Board of Directors will authorize the maximum percentage of reserves in gold to be invested.
//2. B.R. No. 156/97 That it is necessary to modify Article 1 of Board Resolution No. 150/97, which establishes as the maximum limit for investments in gold abroad 5% of the total reserves in that asset, in order to allow the investment of the gold currently deposited in the Institution's vault. That Report SRDE No. 040/97 from the International Affairs Management recommends investing the gold through the establishment of deposits with a term of up to 4 months, having verified that the necessary conditions of security and sovereign immunity exist and that such investment will be carried out in first-line financial entities, according to international risk rating agencies. That in the opinion of the Main Legal Advisory, the Board of Directors is authorized to approve these operations. Therefore, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Approve the investment in time deposits of the International Reserves in Gold that are in the Vault of the Central Bank of Bolivia, in accordance with the Regulations for the Administration of International Reserves and the provisions of this Resolution. The net yield generated by the deposits must include a global discount for purposes of transportation, refining, and certification.
Article 2.- The Reserve Administration Committee will be in charge of carrying out the investments of the Gold Reserves, under the modality of direct administration, under the following conditions:
//3. B.R. No. 156/97 a) It will establish an investment schedule of 15 deposits, of up to a maximum of two point five (2.5) tons of Gold each, to be carried out starting from November 10, 1997. This schedule will be established in such a way that up to fifty percent (50%) of the Gold Reserves are invested abroad and, at the end of it, a minimum of fifty percent (50%) is maintained in the vault of the Central Bank of Bolivia in "London Good Delivery Bar" condition. b) It will choose for each investment established in the schedule, among the institutions listed in Annex 2 of the Regulations for the Administration of International Reserves, the financial entity that presents the best quote for the net time deposit rate, within the limits established by Article 29 of said Regulations. c) It will constitute the deposits in the selected financial entities, for a term not greater than four (4) months each.
Article 3.- The Reserve Administration Committee will report monthly to the Board of Directors on the execution of the schedule and the yield of the investment of the Gold Reserves, presenting the supporting documentation on the investments made.
Article 4.- The Internal Audit Unit, in compliance with Article 4 of the Regulations for the Administration of International Reserves, must include in its quarterly report to the Board of Directors a specific chapter on the administration of International Reserves in Gold.
//4. B.R. No. 156/97 Article 5.- Repeal Article 1 of Board Resolution No. 150/97.
Article 6.- The Presidency and General Management are charged with the execution and compliance of this Resolution.
14.X.97
Juan Antonio Morales A.
Armando Pinell S. Jaime Ponce G.
Juan Medinacelli V. Fernando Campero P.
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