On March 22, 2012, was approved the Law 26,739 (the “Law”) amending the charter of the Central Bank of Argentina (“BCRA”). The Amending will return the BCRA the ability to make the financial system to serve the development and growth of the real economy, and to make the credit available for productive activities and investments and for companies of any size and geographical location.
The Law states that the purpose of BCRA, within their powers and policy framework established by the National Government, is to promote monetary and financial stability as well as employment and economic development with social equity.
Consistent with the foregoing, adding new functions and powers inherent in the BCRA consisting of: regulating the amount of money and interest rates and regulate and guide the credit, play an active role in the integration and international cooperation, contributing to the smooth functioning capital market, regulate any activity that relates to financial and currency activity, provide for the protection of the users of financial services and competition’s rights.
In the same way expands the functions and powers of the Board, namely: establish accounting and reporting system for entities supervised by the bank; determinate the level of gold reserves, foreign exchange and other foreign assets required for the implementation of exchange rate policy; regulate credit condition in terms of risk, interest rates, commissions and charges of any kind; make rules that preserve competition in the financial system; make rules for obtaining, by the financial institution, and foreign currency resources through the issuance of bonds, debentures and other securities, both in the local market and in the external; extend the implementation of the Financial Institution Act to persons not included in it; and finally, establish separate policies aimed at small and medium enterprises and regional economies.
According to bank transactions, empowers the BCRA to grant advances to financial institutions with surety, collateral assignment, pledge or special impairment of debts securities or participation certificates issued by financial trusts whose assets are made up of credits or other financial assets which the debtor or guarantor is National Government, in order to promote the supply of credit to medium and long term devoted to productive investment.
In the case of advances for productive investment the Board may accept that the total of the guarantees required, up to twenty five percent (25%), is integrated by government bonds or other securities, or warrant or special or general involvement assets, taking into account for it within the operation.
The Law also establishes that temporary advances may be granted exceptionally by an additional amount equal to ten percent (10%) of the cash resources that the Government has obtained in the last twelve (12) months. This advance must be paid within eighteen (18) months of award, beyond which the BCRA may not grant the national government advances to increase this last concept.
Regarding utilities, the Law stipulates that the bank losses in a given year shall be charged to reserves established in previous years and if it’s not possible, to affect the institution’s capital.
Finally, the Law states that in exercising its functions the Central Bank shall not be subject to orders, directions or instructions of the Executive, or may assume obligations involving condition them, restrict or delegate without express permission of the National Congress.
The Law came into force on Friday 6, April 2012.