Resolution CMN No. 2197 — Authorizes the Establishment of a Private Non-Profit Entity to Administer a Protection Mechanism for Credit Holders Against Financial Institutions

RESOLUTION NO. 002197

Authorizes the establishment of a private non-profit entity intended to administer a protection mechanism for holders of credits against financial institutions.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4.595 of December 31, 1964, makes public that the NATIONAL MONETARY COUNCIL, in a session held on August 30, 1995, in accordance with the provisions of Law No. 9.069 of June 29, 1995, in Articles 3, items IV, V, and VI, 4, items VI, VIII, XI, and XVII, and 30, of the aforementioned Law No. 4.595; in Article 17 of Law No. 4.380 of August 21, 1964, and in Article 7 of Decree-Law No. 2.291 of November 21, 1986,

RESOLVED:

Article 1. The establishment of a private non-profit entity intended to administer a protection mechanism for holders of credits against financial institutions is authorized.

Paragraph 1. Financial institutions that receive sight deposits, time deposits, and savings accounts, as well as savings and loan associations, shall be members of the entity and shall participate as contributors.

Paragraph 2. The provisions of the preceding paragraph do not apply to credit cooperatives and the credit sections of cooperatives.

Article 2. The bylaws of the entity referred to in the preceding article shall be submitted for approval to the National Monetary Council and shall provide, among other things, for:

I - administrative bodies and their respective competencies and duties;

II - the form of supervision of the application of resources and the management acts of the entity;

III - the examination, by an independent external auditor, of the entity's financial statements.

Article 3. The regulations of the mechanism covered by this Resolution shall be approved by the National Monetary Council and must provide, among other things, for:

I - situations capable of triggering the protection mechanism.

II - institutions whose creditors will have their credits protected;

III - credits that will be protected and their respective limits;

IV - contribution criteria, including extraordinary contributions, from participating institutions;

V - policy for the application of the entity's financial resources, including criteria for risk composition and diversification;

VI - form and timing of payment of protected credits;

VII - limit of the entity's liability regarding its assets;

Article 4. The revenues of the entity referred to in Article 1 of this Resolution shall consist of:

I - contributions, including those on the form of advance and extraordinary payments, from associated institutions;

II - service fees resulting from the issuance of checks without provision, in accordance with the regulations to be issued by the National Monetary Council, after the transfer provided for in the following article;

III - the net result of services provided by the entity and the earnings from the application of its resources;

IV - occasional revenues.

Article 5. The entity referred to in Article 1 of this Resolution, upon its creation, shall absorb:

I - the assets of the Deposit and Real Estate Letter Guarantee Fund (FGDLI), governed by the Regulation annexed to Resolution No. 1,861 of August 28, 1991;

II - the assets of the Reserve for Currency Stability and Check Use (RECHEQUE), as provided in Resolution No. 2,155 of April 27, 1995.

Sole Paragraph. The Deposit and Real Estate Letter Guarantee Fund (FGDLI) and the Reserve for Currency Stability and Check Use (RECHEQUE) shall be extinguished on the date of the transfer.

Article 6. The mechanism covered by this Resolution shall operate until Article 192 of the Federal Constitution is regulated by the National Congress.

Article 7. This Resolution enters into force on the date of its publication, rescinding Resolution No. 1,099 of February 28, 1986, and, from the absorption referred to in Article 5, item I, of this Resolution, Resolution No. 1,861 of August 28, 1991, and other normative acts derived from them.

Brasília, August 31, 1995

Gustavo Jorge Laboissière Loyola
President