EXTERNAL CIRCULAR OF THE CENTRAL BANK OF BOLIVIA

La Paz, April 12, 2012 SGDB No. 013/2012

FROM: GENERAL MANAGEMENT FINANCIAL ENTITIES MANAGEMENT TO: FINANCIAL ENTITIES SUBJECT: BOARD RESOLUTION NO. 042/2012 AMENDMENT TO THE LEGAL RESERVE REGULATION

---

Ladies and Gentlemen:

We are sending you Board Resolution No. 42/2012 of April 10, 2012, issued by the Central Bank of Bolivia, which modifies Article 16 of the Legal Reserve Regulation and will enter into force starting April 23, 2012.

Sincerely.

---

CRO/MMV/OID Attachment: As indicated

---

Ayacucho and Mercado • Tel: (591-2) 2409090 • P.O. Box: 3118 bcb@bcb.gob.bo • La Paz - Bolivia

# Central Bank of Bolivia
Board of Directors

## BOARD RESOLUTION NO. 042/2012

**SUBJECT:** ECONOMIC POLICY ADVISORY / FINANCIAL ENTITIES MANAGEMENT - APPROVES AMENDMENT TO THE LEGAL RESERVE REGULATION.

### VIEWED:

- The Political Constitution of the State promulgated on February 7, 2009.
- Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB).
- The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005 and its subsequent modifications.
- The Legal Reserve Regulation approved by Board Resolution No. 070/2009 of June 23, 2009 and modified by Board Resolutions 130/2010 of November 23, 2010, 007/2011 of January 18, 2011, 072/2011 of June 14, 2011, and 007/2012 of January 10, 2012.
- The Report from the Economic Policy Advisory and the Financial Entities Management BCB-APEC-SSIEE-INF-2012-15/BCB-GEF-SANA-INF-2012-4 of April 4, 2012.
- The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2012-100 of April 5, 2012.

### CONSIDERING:

- That the Political Constitution of the State in its Article 328 provides that the BCB, in coordination with the economic policy determined by the Executive Branch, is authorized to determine and execute monetary policy.
- 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, will determine their composition, amount, calculation method, characteristics, and remuneration.
- That in its Article 37, the aforementioned legal norm establishes that the BCB is the custodian of the liquid reserves intended to cover said reserve and may delegate the custody of these deposits according to specific regulations.
- That the BCB Statute in Article 11 numeral 7) states that it is the authority 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 according to Regulation.

//2. B.R. No. 042/2012

- That the Legal Reserve Regulation aims to establish the technical and operational conditions of mandatory compliance for financial entities that are duly authorized for operation by the Supervisory Authority of the Financial System, regarding the constitution and form of administration of the legal reserve.
- That the Main Economic Policy Advisory and the Financial Entities Management through report BCB-APEC-SSIEE-INF-2012-15 / BCB-GEF-SANA-INF-2012-4 recommend the approval of the modification of Article 16 of the Legal Reserve Regulation.
- That according to Report BCB-GAL-SANO-INF-2012-100, the modification proposal presented by the Main Economic Policy Advisory and the Financial Entities Management is legally appropriate as it does not contravene the current legal framework, being within the competence of the BCB Board to consider its approval.
- That the BCB Board in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized regulations of general application, and internal norms, being authorized to issue norms and adopt general decisions that are necessary for the fulfillment of the functions, competencies, and powers assigned by Law to the Issuing Entity, as established in Articles 44 and 54 item o) of Law No. 1670 and Articles 9, 11, and 24 of the BCB Statute.

### THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA
**RESOLVES:**

**Article 1.-** Approve the partial modification to Article 16 (Sanctions for Early Withdrawals of Time Deposits) of the Legal Reserve Regulation as follows:

#### SAYS:
Fixed-term deposits that maintain any exemption from reserve, under what is established in this Regulation, cannot be redeemed early.

When the issuing entity acquires its own fixed-term deposit certificates, these must be cancelled and removed from the accounts, communicating said removal to the BCB within a period not exceeding 48 hours after it occurs.

#### MUST SAY:
“Fixed-term deposits that maintain any exemption from reserve, under what is established in this Regulation, cannot be redeemed early. This prohibition is excepted for fixed-term deposits in foreign currency that,

//3. B.R. No. 042/2012

being exempt from constituting legal reserve, are redeemed with the sole and exclusive purpose of converting them into deposits in national currency.

When the issuing entity acquires its own fixed-term deposit certificates, these must be cancelled and removed from the accounts, communicating said removal to the BCB within a period not exceeding 48 hours after it occurs.”

**Article 2.-** This partial modification of the Legal Reserve Regulation will enter into force starting April 23, 2012.

**Article 3.-** The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, April 10, 2012