february 10/2016

bank of the republic:

administration of international reserves:

it is encarge of administrate the reseves and it takes place in the criteria of security and liquidity with the aim of facilitating national payments abroad.

the bank look for security and stavility in his payments to another countries. Those payments are generated by the diference between the sales and the imports, the diference between income proceeding from foreig loans and deposits remitted by Colombians residing abroad and those remitted to them.

banker of banks :

As with any central bank, the Banco de la República plays the role of banker of banks. On one hand, it is the depository of the money allocated in fulfilment of the bank reserve requirements, which serve to regulate the credit-issuing capacity of the banking system. This reserve, maintained under the tightest security, backs the liquidity of the banking system.

Credit Functions of the Banco de la República

As regards the tendering of credit by the Banco de la República to the Government, although not prohibited by the new regime, very rigorous conditions exist for the concession of credit. In effect, this sort of credit should be limited to instances of dire necessity and should be conceded only with unanimous approval of the Board of Directors.

Nevertheless, it is important to point out that the Constitution left the possibility open for the Bank to continue acquiring Government bonds on the secondary market. In this way, it is not the Bank which directly finances the Government but rather individuals who have purchased these bonds.

Foreign Exchange Functions

Law 31 also attributes the Bank with the task of formulating exchange policy within the framework of the criteria and objectives laid down by the Congress of the Republic aiming at the regulation of foreign trade and the international exchange rate regime.

The external situation of the country directly affects monetary conditions. Therefore, the Bank should participate in the drafting and definition of policy regarding foreign exchange rate and the flow of international capital. Thus, one of the Bank's several functions is to organise and regulate the foreign exchange market and intervene in the market with the purpose of defending the exchange rate, in order to regulate the conditions of the country's borrowing abroad.

Government Banker, Fiscal Agent and Trustee

The Banco de la República fulfils these duties by receiving funds in deposit from the Nation and public entities under the conditions established by the Board of Directors. Furthermore, the Banco de la República may act as fiscal agent in the negotiation of external and internal credits upon Government request and if such action is compatible with the Bank's objectives.

Issue of Legal Tender

The currency-issuing attribute, characteristic of the Nation's monetary sovereignty, is exclusive to the Banco de la República and can not be delegated. This attribute has materialised by means of various contracts, with the authorisation of Congress.

Promoter of Scientific, Social and Cultural Development

The professional expertise and operating structure of the Bank has enabled it to support simultaneously the scientific, social and cultural development of the country through the creation of foundations designed to select, finance and otherwise stimulate research in the fields of sciences, technology, anthropology, archaeology, education, health and humanities. Moreover, the Bank has participated in efforts to rescue and preserve cultural heritage as well as in efforts to stimulate continued development through the creation and administration of libraries and specialised museums throughout the country.

The Board of Directors' Report to the Congress

This Report explains the execution of the monetary, exchange and credit policies as well as containing general guidelines for deciding these policies, an evaluation of results achieved in the past period and a presentation of the objectives and goals proposed for the subsequent period and in the medium term. Additionally, the Report explains the administration policy and composition of the international reserves and the Bank's current financial situation and prospects. Furthermore Congress can request additional reports from the Bank, and if during the course of the year a substantive change takes place with regard to the policies mentioned in the Report, the Board of Directors is required to present an additional report.