The Board of Directors of the Banco de la República consists of seven members with one vote each: the Minister of Finance, five full-time members and the General Manager of the Bank, who is appointed by the other members. Full-time members and the General Manager are appointed for fixed periods of four years, twice renewable, which means they can remain on the Board for up to twelve (12) years. The President of the Republic replaces two of the full-time members every four years, halfway through the presidential period.
According to the Political Constitution the Banco de la República is independent from the other branches of public power, enjoys administrative, heritage and technical autonomy and is subject to its own legal regulation. The Board of Directors is the country’s monetary, exchange and credit authority and its members exclusively represent the Nation’s interests.
The Constitution conferred the Banco de la República with the objective of safeguarding the maintenance of currency purchasing power and for this purpose the Board of Directors carried out the various functions established by the Constitution and the Law.
Additionally, full time members of the Board are also members of the Administrative Council, the Bank’s main administrative body, and are responsible for adopting administrative policies and for ensuring the Bank’s correct procedures, as determined by the Law and the Bank’s Statutes.
The Board of Directors of the Banco de la República was established by the National Constitution as a monetary, exchange and credit authority in order to achieve the State’s objective of maintaining currency purchasing power (article 373, subsection 1 of the National Constitution and Law 31, 1992, article 2).
Law 31, 1992
Functions of the Board of Directors of the Bank as Established by Law 31 of 1992
In order to comply fully with this assignment, the Board of Directors was authorised to study and adopt measures that regulate the monetary base and the liquidity of the financial market, as well as to ensure the normal functioning of internal and external payments of the economy.
The Law specifically empowered the Board with the following functions:
- To fix and regulate the cash reserves of different types of credit institutions.
- To regulate interbank credit destined to meet the temporary liquidity requirements of credit institutions.
- To fix the interest rate limits of credit institutions and establish maximum limits on the growth of their credit operations, when circumstances require and on a temporary basis (for a maximum of 120 days in any given year). These restrictions ensure that it is the market that ultimately defines these variables.
- To establish the methodology for the determination of legal currency values of Units of Constant Purchasing Power (UCPP), ensuring that this also reflects interest rate movements in the economy.
- To decide the Banco de la República’s intervention in the foreign exchange market as a buyer or seller of currencies.
-To determine management policy with respect to the exchange rate, which should contribute to preserving the currency’s purchasing power.
Functions of the Board
of Directors as monetary, exchange and credit authority
16. Atributions. It corresponds to
Banco de la República to study and adopt the
monetary, credit and exchange measures to regulate
monetary circulation and, in general, the liquidity
of the financial market and the normal functioning
of the internal and external payments of the economy,
safeguarding the stability of the currency’s
For such purpose, the Board of Directors may:
a) Fix and regulate
reserve requirements for the various categories of
credit establishments and, in general, of all the
entities which receive at sight, at term or savings
deposits, to fix their remunaration or not, and to
establish sanctions for infringement of the norms
regarding this matters. For these purposes, aspects
such as the kind and period of the operation subject
to reserve may be considered. Reserve requirements
must be represented by deposits in the Banco de la
República or cash holdings;
Ruling C- 383 27th May 1999 of the Constitutional Court (see quote [5-1]).
b) Arrange the carrying out of open market operations
with its own securities, with public debt securities
or with those authorized by the Board of Directors,
in these cases in legal tender or forerign currency;
determine the intermediaries for these operations
and the requirements that these must meet. In developing
this faculty it can dispose the realization of repo
operations in order to regulate the economy’s
c) Establish, through norms of general nature, the
financial conditions to which public entities authorized
by law to acquire or place securities must subject
themselves in order to insure that these operations
take place within market conditions. Without the compliance
of these conditions such securities cannot be offered
d) Establish, in exceptional situations and for periods
that do not add up to more than one hundred and twenty
(120) days per year, limits to the growth of the portfolio
and other active operations, such as backings, guarantees
and acceptances, carried out by credit establishments;
e) Establish, in exceptional situations and for periods
that do not add up to more than one hundred and twenty
(120) days per year, the maximum remuneratory rates
of interest that credit establishments can charge
or pay their customers over all active or credit operations,
without inducing real negative rates. The maximum
rates of interest that may be agreed to for operations
in foreign currency shall continue being subject to
the determinations of the Board of Directors.
These rates may be different according to aspects
such as the kind of operation, the destination of
funds and their place of origin.
Credit establishments which charge interest rates
in excess of those established by the Board of Directors
are subject to the administrative sanctions established
by the Board in a general way for these cases;
f) Fix the methodology for the determination in legal
tender of the Unidad de Poder Adquisitivo Constante
UPAC, endeavouring that this also reflects the movements
of the rate of interest in the economy;
g) Regulate interbank credit to meet transitory liquidity
requirements of credit establishments;
h) To exercise the functions of exchange regulator
envisaged in paragraph 1 of article 3 and in articles
5 to 13, 16, 22, 27, 28 and 31 of Law 9, 1991; .
From the Administrative Court of Cundinamarca, 29th July 2004.
i) Arrange the intervention of Banco de la República
in the foreign exchange market as a buyer or seller
of foreign currency, or the security issuance in foreign
currency. Likewise, determine the exchange rate policy
in agreement with the Finance and Public Credit Minister.
In the case of disagreement, the State’s Constitutional
responsability to safeguard the mantainance of the
purchasing power of the currency shall prevail;
j) Issue previous opinion in favour of the monetization
of the foreign currency originated in the payment
of temporary surpluses dealt with in article 31 of
Law 51,1990, and
k) Issue an opinion, when it considers it necessary
and during the legislative procedure, regarding the
amount of rsources of internal and external credit
included in the budget project with the purpose of
complying with the mandate envisaged in article 373
of the Political Constitution.
Paragraph 1. The functions described in this article will be implemented by the Banco de la República without detriment of the functions attributed to the national Government by the Constitution and the Law.
Paragraph 2. The General Treasury of the Republic cannot be managed according to monetary control criteria.
Paragraph 3. Districts and Municipalities can make use of the faculties laid down in point b) of article 5 of Law 86 of 1989, in order to finance directly the works and acquisitions mentioned by this law. The respective Councils will regulate the collection of the resources mentioned by this law and will determine the starting date for charging resources.
Ruling C-070 23rd February 1994 of the Constitutional Court.
The text in Italics (Article 16, point a) – partial-) was declared reasonable, under certain conditions, by means of Ruling C-827 of 8th August 2001 of the Constitutional Court. Presiding Magistrate - Alvaro Tafur Galvis.
 The text in Italics and bold (Article 16, point e) partial) was declared unreasonable by means of Ruling C-208 of 1st March 2000 of the Constitutional Court. Presiding Magistrate – Antonio Barrera Carbonell.
 The text in Italics and bold (Article 16, point f) partial) was declared unreasonable by means of Ruling C-383 of 27th May 1999 of the Constitutional Court. Presiding Magistrate – Alfredo Beltrán Sierra.
[5-1] By means of Ruling C-955 of 26th July 2000 (Presiding Magistrate – José Gregorio Hernández Galindo) the Constitutional Court assigned the Board of Directors with the function of developing the methodology for the determination of the legal tender value of the unit of real price (URP) established by Law 546 of 1999. This unit replaced the Unit of Constant Purchasing Power (UCPP). The norms governing the UCPP system were declared unreasonable by means of Ruling C-7000 of 16th September 1999 of the Constitutional Court. Presiding Magistrate – José Gregorio Hernández Galindo.
 Law 9ª of 1991, paragraph 1 of article 3 and articles 5 to 13, 16, 22, 27, 28 and 31 of Decree 39634 of 17th January of 1991. Page 1.
 First instance ruling: Annulment and re-establishment of Banco Davivienda S.A’s right against the Banking Superintendence and the Nation – Ministry of Finance and Public Credit. Presiding Magistrate – Hugo Fernando Bastidas Bárcenas. Ref. 02-0036.
 The text in Italics and bold (Article 16, paragraph 3) was declared unreasonable by means of Ruling C-070 of 23rd February of 1994 of the Constitutional Court. Presiding Magistrate Hernando Herrera Vergara.