Some Considerations on the Financial Statements of the Banco de la República as of September.

The Banco de la República reported its financial situation for september of this year. It can be observed that the assets total a value of $340 billion (b)  which the main one is the international reserves with $274b which constitute 81% of the total of these assets. These reserves are classified within the category of assets abroad which total $282b. Therefore, the international reserves are the source of the financial results of the bank. */

In addition to the assets abroad, there are also internal assets that have a value of $58b and between both external and internal they add up to $340b of the total mentioned. The internal assets are mainly the active monetary regulation operations (Repos and TES) for a value of $54b, which represent 93% of the total internal assets. The other internal assets are mainly property, plant and equipment $1.5b and assets of historical, artistic and cultural heritage $0.3b.

Of the above, it is worth highlighting the work mandated by the Banco de la República to manage the country's international reserves, for which the entity distributes its management in two portfolios, one of investments in direct administration and another of investments in external administration, the first totaling $183b and the second $69b. These two portfolios are complemented by the reserves deposited in the International Monetary Fund and in the Latin American Reserve Fund for amounts of $17b and $3b respectively.

As mentioned before, in addition to the external assets, which are mainly the international reserves, the assets include the internal assets, which are mainly the monetary regulation operations that provide the liquidity necessary for the functioning of the country's economy, such as the TES with $30b and the Repo operations $24b.

Also, with values ​​lower than those previously mentioned, the historical, artistic and cultural heritage assets are also listed as internal assets, which although they are low in comparison with the other assets, are of special importance in the country's art and culture.

On the other hand, within the presentation of the balance sheet, on the liabilities side, which also total $340b as assets, are divided into internal liabilities $182b, external liabilities $32b and equity $126b.

Within the internal liabilities for $182b, we can distinguish the banknotes in circulation for $130b, bank deposits in accounts for $34b and deposits of the national government for $9b (there are no accounts for individuals as in other banks and financial entities). Also listed within the internal liabilities are the labor obligations and employee benefits for $0.1b, which is a lower value with respect to the other internal liabilities mentioned.

Of the banknotes in circulation mentioned (according to the Bank of the Republic) the ones considered cash in the hands of the real sector (agents that are not credit institutions) are taken and two things are added, the deposits of the financial system in the bank referred to earlier in this note as bank deposits in account and the cash in the financial system's cash box and what results from this aggregation is the so called monetary base. This monetary aggregate is one of several that show the fulfillment of the functions of money in the economy, serving as a means of payment and as a store of value.

Continuing with the description of the liabilities, in the external liabilities for $32b there are mainly obligations with international organizations for $23b and accounts payable in international reserve operations for $8b.

Regarding the bank's equity for $126b, it is made up of a surplus of $117b and a profit of $9b. These profits of the bank by law must be transferred to the National Government to its financial accounts for their pertinent disposition.

The profits corresponding to the end of september is higher than that recorded in the same month of the previous year when it reached $5b, that is, it grew by 80%. Fundamentally, as mentioned, it is the result of investments in international reserves.

Also, international reserves in september of this year grew by 12.8% compared to a year ago, monetary regulation operations fell by 17%, banknotes in circulation rose by 10% and government deposits in bank accounts fell by 80%. The latter show with this decrease the cash shortage to make payments reflected in these accounts.

Consequently, the monetary base described above also reached $148b, a result higher than $139b from a year ago, an increase of 6.4%. Within this monetary aggregate, cash was $114b and $106b for both cases. There are considerations from various studies and think tanks about the convenience of reducing the participation of cash in the means of payment, which as in the monetary base reaches 77% in the month of september.

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 */. International reserves act as a reference that serves as a back up for the request for public and private external credits and as support that protects the country's economy from an acute balance of payments crisis.

According to the Bank of the Republic, international reserves are the external assets under the control of the monetary authorities, expressed mainly in foreign currency (foreign currency and deposits and securities in foreign currency), monetary gold, Special Drawing Rights (SDR), the IMF reserve position and other assets.