Título IV. Operaciones del Banco

On the basis of the monetary, exchange rate and credit policy determined by the Monetary Board, the Bank of Guatemala may grant credit to banks of the system, solely to remedy temporary liquidity deficiencies, taking into account for such purpose a report that the Superintendent of Banks must submit to it regarding the liquidity, solvency, profitability and quality of the principal assets of the requesting bank.

The total amount of the credit may be up to the equivalent of one hundred percent (100%) of the sum of the average reserve requirement in the preceding monthly period of the bank concerned, which must secure it with securities or instruments, or a pledge guarantee over credits, both of the highest quality, or a mortgage guarantee. The term of such credit may not exceed sixty (60) calendar days, which, at the reasoned request of the bank concerned, may be extended for half of the original term. The interest rate to be applied to the credit must be higher than the average rate that the bank concerned applies in its lending operations. A single bank may be granted a maximum of two (2) credits in a twelve (12) month period, provided that they are granted in two non-consecutive months within such period.

The Superintendency of Banks must report to the Monetary Board, within a period not exceeding ten (10) working days after the granting of the credit, on the causes that gave rise to the liquidity deficiencies, as well as the quality and status of the guarantees that secure the credit.

The provisions of this article shall be regulated by the Monetary Board, upon proposal of the Bank of Guatemala.

The Monetary Board may authorize the Central Bank to enter into cooperation agreements and monetary integration agreements with central banks, associations of central banks, or other similar entities.

The Bank of Guatemala may carry out, with international banking institutions, the operations that correspond to it in accordance with the international agreements signed and ratified by the Republic of Guatemala, and with the legal provisions that are issued on the matter.

The Bank of Guatemala, with the prior authorization of the Monetary Board, may obtain and grant financing and carry out other operations appropriate to the nature of a Central Bank, with other central banks, with multilateral financial organizations, or with foreign financial institutions.

When any of the operations referred to in the preceding paragraph involves the assumption of loans or other forms of debt, the Bank of Guatemala must have the prior approval of the Congress of the Republic.

The Bank of Guatemala, with the prior authorization of the Monetary Board, may act as agent or correspondent of other central banks, international banking institutions and other foreign financial institutions, and may appoint such entities as its agents or correspondents abroad.