Resolution JPRFM-2026-012-F Approves Reforms to Chapter XXI "Categorization and Valuation of Adequate Guarantees"

THE FINANCIAL AND MONETARY POLICY BOARD
CONSIDERING:

That, Article 226 of the Constitution of the Republic of Ecuador prescribes that public officials and persons acting under state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law;

That, Article 227 of the same Constitution states that Public Administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That, the first clause of Article 303 of the constitutional norm determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive faculty of the Executive Branch and will be implemented through the Central Bank of Ecuador;

That, Article 309 of the Constitution of the Republic establishes that the national financial system is composed of the public, private, and popular and solidary sectors. Each of these sectors will have specific and differentiated control norms and entities, responsible for preserving their safety, stability, transparency, and solidity;

That, on October 13, 2025, the Organic Reform Law of the Organic Code of Monetary and Financial Law was published in the Sixth Supplement of the Official Register No. 142;

That, Article 13 of the Organic Code of Monetary and Financial Law creates the Financial and Monetary Policy Board, part of the Executive Branch, as an organ with functional, technical, institutional autonomy, and in its decisions, responsible for the formulation of monetary, credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation. The Financial and Monetary Policy Board will be the highest governing body of the Central Bank of Ecuador;

That, Article 17 of the aforementioned Code, in its pertinent part, determines that:

"(...) For the fulfillment of these functions, the Board will issue norms in matters within its competence, without being able to alter legal provisions. The Financial and Monetary Policy Board may issue regulations by segments, economic activities, and other criteria. It may even reform or repeal regulations from the former Monetary Policy and Regulation Board, Financial Policy and Regulation Board, or Monetary and Financial Policy and Regulation Board. All norms and policies issued by the Financial and Monetary Policy Board in the exercise of its functions, duties, and powers must be backed by duly substantiated technical and legal reports (...)";

That, Article 18 of the same Code establishes the specific functions of the Financial and Monetary Policy Board in the financial sphere. In particular, it empowers it to issue the necessary regulations to preserve the integrity, solidity, sustainability, and stability of the national financial system, in accordance with what is provided in Article 309 of the Constitution of the Republic. It also corresponds to it to issue microprudential regulations applicable to the sectors that make up the national financial system; regulate the creation, constitution, organization, activities, operation, and liquidation of financial entities; and issue the prudential regulatory framework to which these entities must adhere;

That, Article 24 of the same Code provides that the acts of the Financial and Monetary Policy Board enjoy the presumption of legality and will be expressed through resolutions that will have mandatory force, which will govern from their publication in the Official Register, or from the date of their issuance when so determined by the Board, in accordance with the subject matter;

That, Article 25.2 of the same Code determines that the Technical Secretariat of the Financial and Monetary Policy Board is exercised by the Central Bank of Ecuador, and Article 25.3 establishes as its functions the preparation of technical and legal reports to support regulatory proposals, provide technical and administrative support to the Financial and Monetary Policy Board, and any others assigned by said Board;

That, Article 210 of the aforementioned Organic Code determines that financial entities of the national financial system cannot carry out active and contingent operations with the same natural or legal person for a sum that exceeds, in total, 10% of the entity's technical equity. This limit will only be raised to 20% if what exceeds the 10% corresponds to obligations secured with guarantees from national or foreign banks of recognized solvency or by adequate guarantees, in the terms issued by the Financial and Monetary Policy Board;

That, Chapter XXI "Categorization and valuation of adequate guarantees", Title II "National Financial System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, indicates the adequate guarantees for the application of Article 210 of the Organic Code of Monetary and Financial Law;

That, financial instruments issued by sovereign governments, central banks, multilateral organizations, and supranational organizations with high international credit risk ratings constitute assets of high credit quality and high liquidity in international financial markets, characterized by their low level of risk and wide negotiability in secondary markets; and that, in accordance with prudential risk management principles and international regulatory standards applicable to the treatment of high-quality credit assets, it is pertinent to recognize that such instruments, when they meet objective parameters of rating and solvency, can constitute adequate guarantees, in the terms provided in Article 210 of the Organic Code of Monetary and Financial Law;

That, General Provision Twenty-Ninth of the same Code states: "In current legislation where mention is made, indistinctly, of the Monetary and Financial Policy and Regulation Board, the Monetary Policy and Regulation Board; or, the Financial Policy and Regulation Board, replace and understand as 'Financial and Monetary Policy Board';

That, First Transitional Provision of the Organic Reform Law of the Organic Code of Monetary and Financial Law determines that the members of the Financial and Monetary Policy Board, sworn in on September 16, 2025, by the National Assembly, will continue to exercise their functions for the periods for which they were designated and will maintain their labor continuity and acquired rights;

That, through Letter No. T.233-SGJ-25-098, dated September 5, 2025, signed by the Constitutional President of the Republic, addressed to the President of the National Assembly, he sent the list of candidates for the designation of the Members of the Financial and Monetary Policy Board; as well as, the temporality of their stay within the initial period;

That, the Plenary of the National Assembly, on September 16, 2025, designated and swore in the members of the Financial and Monetary Policy Board, in the persons of: Gustavo Estuardo Camacho Dávila; Silvia Daniela Moya Arteta; Roberto Javier Basantes Romero; and, María Isabel Camacho Cárdenas;

That, the Financial and Monetary Policy Board, through ordinary session No. 008-2026, under hybrid modality, on March 23, 2026, reviewed the proposal sent via Memorandum No. BCE-BCE-2026-0095-M, dated March 19, 2026, by the General Manager of the Central Bank of Ecuador to the President of the Financial and Monetary Policy Board; as well as, the Reserved Technical Report No. BCE-GEEE-021-2026/ BCE-SEMF-023-2026, dated March 18, 2026; and, the Legal Report No. BCE-GJ-028-2026, dated March 19, 2026; and,

In exercise of its functions and in attention to Article 24 of the Organic Code of Monetary and Financial Law, the Financial and Monetary Policy Board,

RESOLVES:

Article 1.- Following letter m. of numeral 3 "Other guarantees" of Article 1 of Section I "Categorization of guarantees", Chapter XXI "Categorization and valuation of adequate guarantees", Title II "National Financial System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, incorporate the following text:

"n. The pledge on financial investments made in instruments issued by sovereign governments, central banks, multilateral organizations, or supranational organizations, which may be constituted as adequate guarantees, under the following terms:

Sovereign Governments and Central Banks: When these issuers are involved, the country of origin must have a minimum rating of "AA-" or its equivalent, for long or short term, granted by one of the international risk agencies Standard & Poor's, Fitch Ratings, or Moody's Investors Service.

Multilateral and Supranational Organizations: These organizations are exempt from the country risk rating requirement. However, the issuing entity must maintain a minimum risk rating of "AA-" or its equivalent, for long or short term, granted by one of the international risk agencies Standard & Poor's, Fitch Ratings, or Moody's Investors Service.

Rule of the Most Conservative Rating: In case a country or organization has ratings from two or more international risk agencies, the lowest rating will be considered.

Exclusions: Titles issued by countries or entities listed in the restrictive lists of OFAC/UN will not be accepted as guarantees."

Article 2.- Following Article 4 of Section I "Categorization of guarantees", Chapter XXI "Categorization and valuation of adequate guarantees", Title II "National Financial System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, incorporate the following article:

"Art. 4.1.- For the purposes of what is provided in Article 210 of the Organic Code of Monetary and Financial Law, financial investments made by entities of the national financial system in instruments issued by sovereign governments, central banks, multilateral organizations, or supranational organizations that meet the conditions established in this article, will be understood as adequately secured and constituted as adequate guarantee, due to their high credit quality, liquidity, and low risk, for the observance of the limit up to twenty percent (20%) of the technical equity of the investing entity, under the following terms:

Sovereign Governments and Central Banks: When these issuers are involved, the country of origin must have a minimum rating of "AA-" or its equivalent, for long or short term, granted by one of the international risk agencies Standard & Poor's, Fitch Ratings, or Moody's Investors Service.

Multilateral and Supranational Organizations: These organizations are exempt from the country risk rating requirement. However, the issuing entity must maintain a minimum risk rating of "AA-" or its equivalent, for long or short term, granted by one of the international risk agencies Standard & Poor's, Fitch Ratings, or Moody's Investors Service.

Rule of the Most Conservative Rating: In case a country or organization has ratings from two or more international risk agencies, the lowest rating will be considered.

Exclusions: For the application of this article, titles issued by countries or entities listed in the restrictive lists of OFAC/UN are excluded.

Article 3.- In Article 3 of Section II "Risk Weighting Factors for Assets and Contingencies", Chapter VIII "Relationship between Total Technical Equity and Risk-Weighted Assets and Contingencies for Entities of the Public and Private Financial System", Title II "National Financial System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, make the following reforms:

a) In the first clause of numeral 1 of the "NOTES TO REQUIRED TECHNICAL EQUITY", replace the text "multilateral development organizations" with "sovereign governments, central banks, multilateral organizations, or supranational organizations".

b) Incorporate as the final clause of numeral 1 of the NOTES TO REQUIRED TECHNICAL EQUITY the following text:

"For investments made in accordance with what is provided in Article 4.1 of Section I "Categorization of guarantees", Chapter XXI "Categorization and valuation of adequate guarantees", Title II "National Financial System", Book I "Monetary and Financial System" of this Codification", a weighting of 0.00 will be considered for investments in multilateral and supranational organizations; and, a weighting of 0.10 will be considered for those made in sovereign governments and central banks."

GENERAL PROVISIONS

FIRST. - For the purposes of applying what is provided in Article 4.1 incorporated by this resolution, entities of the national financial system will report quarterly to the corresponding control body, the investments made within the scope of application, in the established formats.

SECOND. - For the operations referred to in this resolution, regarding provisions, entities of the national financial system must observe the provisions established in current regulations, according to the nature of each case.

UNIQUE TRANSITIONAL PROVISION. – For the report of the first quarter of the year 2026, investments made in the same period will be included, provided that they meet the conditions established in Article 4.1 incorporated by this resolution.

FINAL PROVISION. - This resolution will enter into force from its issuance, without prejudice to its publication in the Official Register.

The publication on the institutional website and the update of the Codification of Monetary, Financial, Securities, and Insurance Resolutions are entrusted to the General Secretariat of the Central Bank of Ecuador.

COMMUNICATE AND PUBLISH. - Given in the city of Guayaquil, on March 23, 2026.

THE PRESIDENT
Master Gustavo Estuardo Camacho Dávila

The resolution above was processed and signed by Master Gustavo Estuardo Camacho Dávila - President of the Financial and Monetary Policy Board, in the city of Guayaquil, on March 23, 2026.- I CERTIFY.

TECHNICAL SECRETARIAT
Master Jennifer Mishel Carrillo Rosales