Título II. Direccion, administracion y ejecucion

The Monetary Board, constituted in accordance with the Political Constitution of the Republic of Guatemala, exercises the supreme direction of the Bank of Guatemala.

The Monetary Board is composed of the following members:

a)The President, who shall also be the President of the Bank of Guatemala;

b)The Ministers of Public Finance, of the Economy, and of Agriculture, Livestock and Food;

c)One member elected by the Congress of the Republic;

d)One member elected by the business associations of commerce, industry and agriculture;

e)One member elected by the presidents of the boards of directors or governing boards of the national private Banks; and,

f)One member elected by the Higher Council of the University of San Carlos of Guatemala.

These last three members shall serve in their functions for one year.

Without prejudice to the provisions of Article 132 of the Political Constitution of the Republic of Guatemala, the members of the Monetary Board must be Guatemalans of those included in Article 144 of the aforementioned constitutional text, be of recognized honorability, and act in furtherance of the national interest and the fulfillment of the fundamental objective of the Central Bank.

The elected members of the Monetary Board who are to replace those whose term is about to end must be elected within the thirty (30) calendar days prior to the expiry of such term.

In the event of a vacancy, due to death, resignation, incapacity, removal, or other permanent inability to hold the office of member of the Monetary Board, a new member shall be appointed or elected, as the case may be, to complete the respective term.

All members of the Monetary Board shall have alternates, except for the President, who shall be substituted by the Vice President, and the Ministers of State, who shall be substituted by their respective Vice Minister, in accordance with the designation made for that purpose by each of the Ministers.

In the event of the temporary absence or incapacity of a titular member of the Monetary Board, the member's respective alternate shall substitute for that member.

The alternate members of the Monetary Board, when not substituting for the elected titular members, may attend its sessions, with voice but without vote.

The following persons may not be regular or alternate members of the Monetary Board:

a)Persons under thirty years of age;

b)Presidents, directors or employees of banks, except for the regular and alternate members elected by the banks;

c)Insolvent or bankrupt persons, until they have been rehabilitated;

d)Persons who have been convicted of crimes involving a lack of probity;

e)Persons who, for any reason, are legally incapable of performing their functions;

f)Leaders of political organizations;

g)Persons who hold remunerated public offices or employment, whether by popular election or by appointment by any of the Branches of the State or by the municipalities, except for teaching positions;

h)Relatives within the fourth degree of consanguinity and second degree of affinity of the President of the Republic, the Vice President of the Republic and the ex officio members; and,

i)Two or more persons who are relatives within the fourth degree of consanguinity or second degree of affinity; or who are members of the same board of directors of a commercial company.

The prohibitions contained in subparagraphs f), g) and i) of this article do not apply to the regular and alternate members elected by the Congress of the Republic and to the ex officio members, nor to their substitutes.

When any of the impediments mentioned in the preceding article becomes evident or arises subsequently, the Monetary Board, after processing the case in accordance with the rules of due process, shall make a declaration in that regard, in which case the member concerned shall lose such status when the corresponding decision is notified to him or her.

The President, the Vice President and the elected members of the Monetary Board may only be removed on the following grounds:

a)When any of the impediments established in Article 18 of this Law is evidenced, and the Monetary Board has not made the declaration of loss of the respective status;

b)When they are liable for fraudulent or illegal acts or operations, or acts or operations evidently contrary to the fundamental objective and powers of the Central Bank; and,

c)By a final and enforceable conviction judgment issued in criminal proceedings.

The grounds for removal must be reported by the Superintendent of Banks to the Congress of the Republic, in the case of the members elected by that Body, or to the Presidency of the Republic, in the case of any of the other members, so that, after the case has been processed in accordance with the rules of due process, they may decide on the removal.

In addition to the foregoing, the President or Vice President of the Bank of Guatemala may also be removed in accordance with the provisions of Article 60 of this Law.

(Paragraph added by Article 1 of Decree Number 10-2007 of the Congress of the Republic) Regardless of the grounds for removal indicated in this Article, the Congress of the Republic may remove its principal and alternate representatives at any time, by decision of the Plenary adopted by majority, a situation that must be immediately communicated to the Monetary Board.

The Monetary Board shall determine the frequency of its ordinary sessions, and shall hold at least two per month. In addition, it may meet in extraordinary session as many times as it deems appropriate.

Sessions shall be convened by the President or by the Vice President when acting in the President's stead, or when at least three of its members so request.

The President of the Monetary Board shall preside over the sessions and, in the President's absence, the Vice President shall do so. The Monetary Board shall meet validly with the attendance of at least five of its members, and its decisions shall be adopted with the favorable vote of the majority of the members present, except for those decisions that require a qualified majority. In no case shall abstention from voting be admissible.

The General Manager of the Bank of Guatemala and the Superintendent of Banks shall be permanent advisors at the sessions of the Monetary Board, which may also appoint other permanent advisors whom it deems strictly necessary. The permanent advisors shall participate with voice, but without vote, in the sessions of the Monetary Board.

At the request of one of its members, the Monetary Board may invite any other qualified person to participate, with voice but without vote, in the deliberation of a specific topic being addressed by the Board. The invited person shall remain in the session of the Monetary Board only for the time that such deliberation takes.

Participation by the regular and alternate members, and by the permanent advisors, in the sessions of the Monetary Board shall entitle them to receive per diems, which shall be established by the Board itself.

The per diems of occasional advisors shall be regulated by the Monetary Board.

When any of the attendees at the sessions of the Monetary Board has a personal interest in the discussion or decision of a particular matter, or when his or her partners or relatives within the fourth degree of consanguinity or second degree of affinity have such an interest, he or she must withdraw from the session before discussion of that matter begins and remain absent until a decision is reached. If the withdrawal does not occur voluntarily, any other member of the Monetary Board may invite the member concerned to withdraw from the session at the time the matter in question is being addressed. To that end, the member must state the reason supporting the presumption that the member of the Monetary Board concerned has an interest in the indicated matter. The withdrawal must be recorded in the corresponding record.

The Monetary Board shall have the following powers:

a)To determine and evaluate the country's monetary, exchange rate and credit policy, including the programmed targets, taking into account the national and international economic environment;

b)To oversee the liquidity and solvency of the national banking system;

c)To regulate matters relating to the bank reserve requirement and the legal deposit, in accordance with this Law;

d)To regulate the bank clearinghouse or any other instrument or mechanism that pursues the same purposes as the clearinghouse;

e)To authorize, upon proposal of the General Manager, the investment policy for the international monetary reserves;

f)To establish the reserves necessary to strengthen the equity of the Bank;

g)To approve the Budget of Revenues and Expenditures of the Bank of Guatemala and that of the Superintendency of Banks;

h)To approve or modify the administrative structure of the Bank of Guatemala, upon proposal of the General Manager;

i)To appoint and remove the General Manager and the other authorities and senior public officials of the Bank;

j)To approve the financial statements of the Bank annually;

k)To approve annually, for publication, the annual report of the Central Bank;

l)To issue the regulations that correspond to it in accordance with this and other laws;

m)To approve the provisions, rules or legal instruments submitted for its consideration by the Superintendency of Banks or, as the case may be, the Bank of Guatemala; and,

n)To exercise the other powers and faculties that correspond to it under this Law, the Monetary Law and other applicable legal provisions.

The powers referred to in this article shall be exercised without detriment to achieving the fundamental objective established in Article 3 of this Law.

The Monetary Board shall perform its functions with absolute independence and under its sole responsibility.

Any act, decision or omission of the Monetary Board that contravenes legal provisions, or that implies the purpose of causing harm to the Central Bank, shall make all those present at the respective session personally and jointly and severally liable to the Central Bank, the State and third parties for the damage and losses thereby caused.

Members who have had their vote against recorded, and other attendees who have had their objection recorded, in the record of the session in which the matter was discussed, shall be exempt from this liability.

Those who disclose any confidential information regarding matters discussed or to be discussed in the Monetary Board, or who use any information for personal purposes or to the detriment of the State, the Central Bank or third parties, shall incur the same liability.

The member or members of the Monetary Board who vote against a measure adopted by the majority of the members of said Board may state the reasons for their vote, which must be explicitly recorded in the respective record. In addition, the record shall state the name or names of the members of the Monetary Board who did not attend the session in which said measure was adopted, as well as that of any member who, having attended, was absent at the time the decision was made.

The President and the Vice President of the Monetary Board, who are also the President and Vice President of the Bank of Guatemala, shall be appointed by the President of the Republic for a term of four years, counted from the first appointment made pursuant to this Law.

The President and Vice President must be persons of recognized integrity and of notable training and competence in economic and financial matters.

In the event of the temporary absence or incapacity of the President, the President shall be replaced by the Vice President. If the absence or incapacity of the President is permanent, a new appointment shall be made, in which case the appointee shall complete the term of the person replaced.

The President of the Monetary Board and of the Bank of Guatemala shall have the following powers:

a)To propose to the Monetary Board the monetary, exchange rate and credit policy, including the programmed targets, as well as the measures and actions that contribute to its effective implementation;

b)To handle relations with the authorities and agencies of the State, particularly with the Executive Branch, and to seek coordination of the State's economic, financial and fiscal policies with the monetary, exchange rate and credit policy, in order to achieve the fundamental objective of the Bank of Guatemala, for which purpose he or she shall attend the general cabinet and the specific cabinets to which he or she is summoned;

c)To approve the monetary policy report referred to in Article 61 of this Law;

d)To ensure the proper implementation of the monetary, exchange rate and credit policy determined by the Monetary Board;

e)To exercise the principal legal representation of the Bank of Guatemala, judicially and extrajudicially;

f)To delegate his or her representation to the Vice President;

g)To grant powers of attorney in the name of the Central Bank, to represent it and to act in the administrative and/or jurisdictional sphere, as a consequence of the acts and decisions adopted by the Monetary Board;

h)To authorize with his or her signature, together with that of the General Manager of the Bank of Guatemala, the banknotes issued by the Central Bank;

i)To direct and promote the dissemination of the actions of the Monetary Board, in accordance with the provisions of Article 63 of this Law;

j)To resolve matters that are not reserved for decision by the Monetary Board; and,

k)To exercise the other powers that legally correspond to him or her.

The powers referred to in this article shall be exercised without detriment to the attainment of the fundamental objective established in Article 3 of this Law.

The offices of President and Vice President are incompatible with the exercise of any other public or private office, whether remunerated or ad honorem, except for teaching offices and those related to the management of the Bank of Guatemala and to monetary, exchange rate and credit policy, or those arising from a legal mandate or from regulations and other applicable provisions issued by the Monetary Board.

The General Manager shall be responsible for the administration of the Bank of Guatemala and shall answer to the President of this institution and to the Monetary Board for the proper and effective functioning of the Bank.

In the event of the temporary absence or incapacity of the General Manager, the Monetary Board shall designate one of the authorities of the institution, of the immediately lower rank, to substitute for him or her in the position.

The General Manager, or whoever acts in that capacity, must meet the same qualifications that are required to be President of the Bank.

The General Manager shall exercise the legal representation of the Bank of Guatemala, judicially and extrajudicially, in those matters not reserved to the President of the Bank; accordingly, he may perform all acts and execute all contracts that fall within the ordinary course of business of the Central Bank, according to their nature and purpose, those deriving therefrom, and those related thereto. In that capacity, he is empowered to grant, in the name of the Central Bank, without prejudice to the provisions of subparagraph g) of Article 30 of this Law, the powers of attorney that may be necessary.

The General Manager shall have the following powers:

a)To prepare the matters to be submitted for consideration by the Monetary Board and to determine, in coordination with the President, the order in which they shall be proposed at the sessions;

b)To continuously oversee the operation of the institution and its departments, the observance of the applicable laws and regulations, and compliance with the decisions of the Monetary Board;

c)To order the publication of the monetary policy report referred to in Article 61 of this Law;

d)To propose to the Monetary Board the appointment of senior officials;

e)To appoint and remove the other officials and employees of the Bank;

f)To ensure that the management of the international monetary reserves is carried out in accordance with the guidelines issued by the Monetary Board;

g)To prepare the draft Budget of Revenues and Expenditures of the Bank of Guatemala and to oversee its proper implementation;

h)To engage the professional services that he considers necessary for the proper functioning of the Central Bank;

i)To authorize the publication of the Budget of Revenues and Expenditures of the Bank of Guatemala in the official gazette;

j)To authorize with his signature the financial statements of the Central Bank;

k)To authorize with his signature, jointly with that of the President of the Bank of Guatemala, the banknotes issued by the Central Bank;

l)To authorize with his signature the documents and securities issued by the Central Bank; and

m)To exercise the other powers that correspond to him in accordance with the law, the regulations and other applicable provisions issued by the Monetary Board.

The powers referred to in this article shall be exercised without prejudice to the attainment of the fundamental objective established in Article 3 of this Law.

The office of General Manager of the Central Bank is incompatible with the exercise of any other office, whether public or private, and whether remunerated or ad honorem, except for teaching positions and those related to the management of the Bank of Guatemala and to monetary, exchange rate and credit policy, or those arising from a legal mandate or from regulations and other applicable provisions issued by the Monetary Board.

Any act, decision or omission of the General Manager that contravenes the legal provisions, or that implies the purpose of causing harm to the Central Bank, shall render him personally and jointly and severally liable to the Central Bank, the State and third parties for the damage and losses thereby caused.

The employment relationships between the Bank of Guatemala and its workers shall be governed by the internal regulations to be issued by the Monetary Board upon the proposal of the General Manager and, supplementarily, by the provisions contained in the Labor Code.

The Bank of Guatemala shall promote the training and preparation of qualified technical personnel in economic matters, particularly in monetary and financial subjects.

The Bank of Guatemala, through an Executive Committee, shall carry out the monetary, exchange-rate and credit policy determined by the Monetary Board.

The Executive Committee is composed of the President of the Bank of Guatemala, who in turn coordinates it, and of the authorities of the Bank of Guatemala designated by the Monetary Board. Said Committee shall have the technical advisors designated by the Monetary Board upon the proposal of the President. The Vice President of the Bank of Guatemala shall coordinate the Committee in the absence of the President.

The Executive Committee has the following powers:

a)To use the monetary policy instruments in the manner approved by the Monetary Board;

b)To report, at the next session of the Monetary Board, through its coordinator, on the implementation of the monetary, exchange rate and credit policy adopted by the Board; and,

c)To exercise the other powers that the Monetary Board assigns to it for implementing the monetary, exchange rate and credit policy.

The powers referred to in this article shall be exercised without detriment to achieving the fundamental objective established in article 3 of this Law.

The Executive Committee shall meet at least once a week or when convened by its coordinator. All other aspects of its operation shall be determined in the regulations approved by the Monetary Board upon the proposal of the President of the Bank of Guatemala.

What is done at the meetings of the Executive Committee shall be recorded in records, to which the Monetary Board shall have access.

Any act, decision or omission of the Executive Committee that contravenes the provisions of the Monetary Board and other provisions of a legal nature, or that implies the purpose of causing harm to the Central Bank, shall render all those present at the respective session personally and jointly and severally liable to the Central Bank, the State and third parties, for the damage and losses thereby caused.

Members who have caused their vote against to be recorded, and the other attendees who have caused their objection to be recorded, in the record of the session at which the matter was dealt with, shall be exempt from this liability.

The same liability shall be incurred by those who disclose any confidential information regarding matters dealt with or to be dealt with in the Executive Committee, or who make use of any information for personal purposes, or to the detriment of the State, the Central Bank or third parties.