SGDB N° 037/2013: Modification to the Legal Reserve Regulation

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2013 OTC - 3

EXTERNAL CIRCULAR OF THE CENTRAL BANK OF BOLIVIA DISPATCHED

La Paz, December 6, 2013
SGDB N° 037/2013

FROM: GENERAL MANAGEMENT
FINANCIAL ENTITIES MANAGEMENT
TO: FINANCIAL INTERMEDIATION ENTITIES
SUBJECT: MODIFICATION TO THE LEGAL RESERVE REGULATION

Ladies and Gentlemen:

The Central Bank of Bolivia informs financial intermediation entities that through Board Resolution No. 164/2013, the Legal Reserve Regulation was modified. A copy of the aforementioned Resolution is attached for the corresponding purposes.

Very respectfully.

[Signature]
MMV/CCL/MAAM/LPY
Adj.: Board Resolution 164/2013

CENTRAL BANK OF BOLIVIA 85 YEARS
Contributing to the country's development
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Board
-4 DEC 2013 10 46

BOARD RESOLUTION No. 164/2013
SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT - APPROVE MODIFICATION 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 according to Board Resolutions No. 130/2010 of November 23, 2010, No 007/2011 of January 18, 2011, No 072/2011 of June 14, 2011, No 07/2012 of January 10, 2012 and No 042/2012 of April 10, 2012.

The Resolution of the Financial System Authority ASFI No. 687/2013 of October 16, 2013.

The Report of the Economic Policy Advisory and Financial Entities Management BCB-APEC-SSIEE-INF-2013-71 of November 21, 2013.

The Report of the Legal Affairs Management BCB-GAL-SANO-INF-2013-413 of November 22, 2013.

CONSIDERING:

That the Political Constitution of the State in its article 328 provides that the BCB is empowered, in coordination with the economic policy determined by the Executive Branch, to determine and execute monetary policy.

That Law No. 1670 in its article 7 provides that the Issuing Entity may establish legal reserves of mandatory compliance for financial intermediation entities and, to this effect, will determine their composition, amount, method of calculation, 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 the specific regulation that the BCB Statute in article 11

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//2. B.R. No. 164/2013

numeral 7), states that it is the faculty of the Board to establish by absolute majority of votes, legal reserves of mandatory compliance by Financial Intermediation Entities and approve their composition, amount, characteristics, forms of administration, custody, and remuneration in accordance with the Regulation.

That the Legal Reserve Regulation aims to establish the technical and operational conditions of mandatory compliance for financial entities that are duly authorized for their operation by the Financial System Supervision Authority, regarding the constitution and form of administration of the legal reserve.

That the Main Economic Policy Advisory and Financial Entities Management through Report BCB-APEC-SSIEE-INF-2013-71 recommend the approval of the modification of articles 3 and 5 of the Legal Reserve Regulation.

That according to Report BCB-GAL-SANO-INF-2013-413, the Legal Affairs Management concludes that the proposed modification is legally appropriate insofar as it does not contravene the current legal framework, being the competence of the BCB Board to consider its approval by two-thirds of the votes of all its members in accordance with what is provided in article 54 subsection o) of Law No. 1670.

That, the BCB Board in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized general application regulations, and internal norms, being empowered to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies, and faculties assigned by Law to the Issuing Entity, as established in articles 44 and 54 inc. o) of Law No. 1670 and articles 9, 11 and 24 of the BCB Statute.

THEREFORE,
THE BOARD OF THE CENTRAL BANK OF BOLIVIA
RESOLVES:

Article 1.- Approve the modification of Article 3 (Demand liabilities, savings accounts, and time deposits subject to legal reserve) of the Legal Reserve Regulation as follows:

SAYS (ARTICLE 3):

The financial entities included in article 1 of this Regulation must constitute legal reserve in cash and in securities on the liabilities registered in the accounts detailed below:

Liabilities with the public and with state-owned companies on demand

• Current account deposits

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• Inactive current accounts
• Demand deposits
• Certified checks
• Drafts and transfers payable
• Collections to be reimbursed
• Matured securities
• Current account fiduciary deposits
• Demand fiduciary deposits

Liabilities with the public and with state-owned companies for savings accounts

• Savings account deposits
• Savings account deposits closed due to inactivity
• Liabilities with participants in savings plans
• Fiduciary deposits in savings accounts

Liabilities with the public and with state-owned companies at term

• Term liabilities
• Fixed-term liabilities with account notation

Liabilities with the public restricted

• Closed current accounts
• Savings account deposits affected as collateral
• Term deposits affected as collateral
• Fixed-term liabilities with account notation restricted

Other payables

• Management checks

Liabilities with banks and financing entities

• Current account deposits of domestic financial entities subject to reserve
• Other demand liabilities with domestic financial entities subject to reserve
• Financing from foreign entities on demand
• Head office and branches on demand
• Foreign banks and correspondents on demand
• Savings account deposits of domestic financial entities subject to reserve
• Fixed-term deposits of domestic financial entities subject to reserve
• Fixed-term deposits of domestic financial entities with account notation subject to reserve

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• Interbank operations
• Financing from foreign entities at short term for free availability
• Financing from foreign entities at short term for foreign trade operations
• Head office and branches at short term for free availability
• Head office and branches at short term for foreign trade operations

Other Liabilities with the public and with state-owned companies:

• Judicial deposits
• Third-party funds for operations in the Bolsín
• Third-party funds for stock market operations
• Funds to be delivered to third parties for the placement of securities
• Other demand liabilities with the public
• Judicial withholdings
• Prepaid credit letter guarantee deposits
• Other guarantee deposits
• Other restricted liabilities with the public
• Advance collections from credit card clients

SHOULD SAY:

“The financial entities included in article 1 of this Regulation must constitute legal reserve in cash and in securities on the liabilities registered in the accounts detailed below:

Liabilities with the public and with state-owned companies on demand

• Current account deposits
• Inactive current accounts
• Demand deposits
• Certified checks
• Drafts and transfers payable
• Collections to be reimbursed
• Matured securities
• Current account fiduciary deposits
• Demand fiduciary deposits

Liabilities with the public and with state-owned companies for savings accounts

• Savings account deposits
• Savings account deposits closed due to inactivity

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• Liabilities with participants in savings plans
• Fiduciary deposits in savings accounts

Liabilities with the public and with state-owned companies at fixed term

• Term liabilities
• Fixed-term liabilities with account notation

Liabilities with the public and with state-owned companies restricted

• Closed current accounts
• Savings account deposits affected as collateral
• Term deposits affected as collateral
• Fixed-term liabilities with account notation restricted

Other payables

• Management checks

Liabilities with banks and financing entities

• Current account deposits of domestic financial entities subject to reserve
• Other demand liabilities with domestic financial entities subject to reserve
• Financing from foreign entities on demand
• Head office and branches on demand
• Foreign banks and correspondents on demand
• Savings account deposits of domestic financial entities subject to reserve
• Fixed-term deposits of domestic financial entities subject to reserve
• Fixed-term deposits of domestic financial entities with account notation subject to reserve
• Interbank operations
• Financing from foreign entities at short term for free availability
• Financing from foreign entities at short term for foreign trade operations
• Head office and branches at short term for free availability
• Head office and branches at short term for foreign trade operations

Other liabilities with the public, with state-owned companies and with banks and financing entities:

• Judicial deposits
• Third-party funds for operations in the Bolsín
• Third-party funds for stock market operations
• Funds to be delivered to third parties for the placement of securities
• Mobile wallet payment account

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• Prepaid card account
• Other demand liabilities with the public
• Judicial withholdings
• Prepaid credit letter guarantee deposits
• Other guarantee deposits
• Other restricted liabilities with the public
• Liabilities with banks and other financial entities subject to legal reserve restricted
• Advance collections from credit card clients”

Article 2.- Approve the modification to Article 5 (Legal reserve rates) of the Legal Reserve Regulation as follows:

SAYS (ARTICLE 5):

The legal reserve rates on the liabilities detailed in article 3 of this Regulation are as follows:

In MN and MNUFV:

Two percent (2%) for cash reserve
Ten percent (10%) for securities reserve

In ME and MVDOL:

Thirteen point five percent (13.5%) for cash reserve.
Eight percent (8%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on the accounts included in “Other Liabilities with the public and with state-owned companies” indicated in article 3 of this Regulation.

SHOULD SAY:

“The legal reserve rates on the liabilities detailed in article 3 of this Regulation are as follows:

In MN and MNUFV:

Two percent (2%) for cash reserve
Ten percent (10%) for securities reserve

In ME and MVDOL:

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Thirteen point five percent (13.5%) for cash reserve.
Eight percent (8%) for securities reserve

Financial entities must constitute the legal reserve in cash, equivalent to a rate of one hundred percent (100%), on the accounts included in “Other liabilities with the public, with state-owned companies and with banks and financing entities” indicated in article 3 of this Regulation.”

Article 3.- This partial modification of the Legal Reserve Regulation will enter into force from its approval.

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, November 26, 2013