The Foundation Process of the Central Bank of Uruguay  (BCU in Spanish)​



The charter of the Bank of the Oriental Republic of Uruguay (Banco de la República Oriental del Uruguay or BROU in Spanish) was approved in Act No.2.480 on August 4, 1896 establishing it as a legal entity that was highly decentralized.  This bank, constituted formally on August 24, 1896, included in its activities functions common to central banks.

Act No. 9.496 passed on August 14, 1935 brought about an important modification to the BROU´s legal framework.  For the first time, there were signs of what would become the basis for the Central Bank of Uruguay, since it separated the Issuance Department from other banking services and granted it the authority to issue money and to perform other functions inherent to central banks (e.g. the analysis of all issues related to monetary policy, formulating objectives and management, oversight and audit of the provisions referring to the regulatory regime of private, national and foreign banks).

With the passing of Act No. 9.808 on January 2, 1939, a new charter was approved for the institution, categorizing it as an autonomous entity and establishing two separate departments, the Bank and the previously established Issuance Department.  Additional functions were assigned to the issuance Department in new provisions, granting it the responsibility of making coins, following instructions by the Legislative Branch. 


While different sectors of public opinion discussed the possibility of creating a central bank, and even though the Issuance Department remained within the framework of the BROU, starting in 1939, legislation was passed independently on central banking issues. This created and encouraged initiatives to create a central bank based on the already existing Issuance Department, that would have all the functions common to central banks. 

The passing of various laws, including laws referring to import and export control (No 10.000 on January 10, 1941), exchange rates and monetary reform (No 12.670 on December 17, 1959), the Broun’s credit to the Government (No. 13.320 on December 28, 1964), modification of gold backing national currency (No. 13.319 on December 28, 1964), guarantees for savings and deposits (No. 13.330 on April 20, 1965), and having mediated the 1963 banking crack, was enough evidence in favor of creating a specialized institution to work in this area.


After many projects that were developed starting in 1935, a plebiscite was held in Uruguay to vote on a constitutional reform. The result of the vote was the approval of a new Constitution of 1966, which established the Central Bank, as an autonomous entity with technical, administrative and financial autonomy (Article 196), and entrusted the legal system to approve the corresponding Charter.  The same constitutional text established in its temporary and special provisions the opening date for the institution as March 1, 1967 (Annex H), the method for integration (Annex F), and the Bank’s mission and responsibilities.  (They were the same as the ones that the BCU Issuance Department had at the time).

Before the Bank’s Charter was established, some norms included provisions referring to the new organization.  Act No. 13.594 on July 6, 1967, for example, changed the original name of the Central Bank of the Republic (Banco Central de la República), and declared it a legal entity with all the rights and obligations. Act No. 13.608 on September 8, 1967 added other functions pertaining to central banking, such as rediscounts, absorption and fusion of financial institutions, exchange rate policy, financial assistance, among others, and established some regulations that referred to economic and commercial and industrial aspects, prices, income and investments.

Despite all of this, during this period, and due to its importance, it is necessary to refer to Decree Act No. 15.322 of September 17, 1982, that formalized a set of norms that apply to financial intermediation and regulated, among other things, the following issues: a) Identifies the scope of the Act, that applies to all public and private institutions that conduct financial intermediation (including savings and credit cooperatives), and it grants the Bank a role in the process of granting institutions authorization to function, and in the opening of branches or agencies in Uruguay by companies constituted overseas, that conduct some of the activities referred to in this Act. b) Defines the concept of financial intermediation. c) Defines the structure of the financial system, foreseeing the presence of banks, along with non banking financial institutions. d) Regulates procedures for the establishment of financial entities, banking or non banking, granting the Executive Bank the authority to approve with an advisory role of the Central Bank. e) Identifies the power to regulate and control issues related to financial liability, reserve requirements, liquidity and solvency, deadline for closing economic statements, documents of operations, registration and information, overseeing and orienting private financial activity, monitors compliance of laws and decrees, general norms and particular instructions that regulate the activity, participation in the process of revoking authorizations to operate. f) Establishes certain prohibitions for companies that conduct financial intermediation activities. g) Expands the legal powers of the Central Bank with regards to sanctions, previous concomitant and posterior controls on public entities, state owned or not, conducting activities in these areas, and determine specific conditions for the functioning of the entities, conducting inspections, fiscalization and investigative actives and applying sanctions, h) regulate offshore activities, i) Establishes bank secrecy with regards to certain type of operations (passive) and regulates the information regimes that the entitles must adhere to, j) Regulates the bank’s function as a lender of last resort to institutions acting as financial intermediaries, their duties as liquidators, in the headquarters of the administrative office, of the companies that form part of the financial intermediation system and their respective collaterals, the entering in a public register of stockholders of certain corporations.

The passing of Act No.16.131 on September 12, 1990 established competencies for investment banks (application in subsidy of Decree No. 15.322).

Subsequently, due to some deficiencies in the regulations for financial intermediation, Act No. 16.327 of November 11, 1992 was approved replacing some of the provisions found in previous norms.  In general terms, the modifications referred to: a) the process of obtaining authorization to operate since it required financial institutions to obtain previous BCU consent to conduct business, authorization for opening branches of already authorized entities, previous participation in authorizations for fusions, absorption and any transformation of an entity, b)Issuance of general norms and specific instructions in order to maintain liquidity and solvency of companies, as well as limiting risk by identifying maximum amounts and requiring companies to submit adjustment plans, c) adoption of preventive measures that could lead to intervention or immediate suspension of activities of institutions involved, d)act as a last resort lending agent for intermediary financial institutions, e)power to sanction, to issue a previous consent for revoking authorization to do business, and the power to take steps towards revoking an authorization due to legal issues or not carrying out business in the interest of the public.

Act No. 16.426 dated October 14, 1993 refers to the demonopolization of insurance.  It established a Superintendency of Insurance and Reinsurance as an independent body led by a Superintendent to be appointed by the Bank’s Board of Directors.  The Bank would also work through the Superintendency advising the Executive Branch in the process of granting authorization to insurance companies to open and do business.  Later, Act No. 18.412 of November 17, 2008 introduced compulsory insurance for all road vehicles and machinery, and identified the Bank’s role in this process again through the aforementioned Superintendency.  Act No. 18.401 closed the Superintendency at a later date.


The Central Bank of Uruguay’s charter was approved in Act No. 16.696 on March 30, 1995. It was structured in two parts.  One part referred to the organization and the way the institution functions.  The other part regulated the central banking competencies of the institution (e.g. designations, reserves policy, relations with financial intermediary institutions, relations with the Executive Branch and the Superintendency of Institutions of Financial Intermediation, and a specialized division, under the Board of Directors, responsible for supervising and auditing institutions.

The norm, later modified mainly by Act No.18.401 on October 24, 2008, introduced substantial changes both structural and regulatory including a) identifying its main objectives (e.g. to obtain price stability that contributes to economic growth and employment, to regulate and supervise payment systems and the financial system in order to promote a sound, solvent, efficient system and its development , b) increased the number of directors from three to five, c)modified the time directors served making the term coincide with the change of government since they are appointed by the President of the Republic with consent of Minister’s Council and previous approval of the Senate, d) created a Superintendency of Financial Services, reporting to the Board of Directors, that is independent with technical and operational autonomy, whose competencies include all the functions that were performed previously by superintendencies and divisions responsible for supervising entities operating in the financial market, e) included the supervision of other entities previously not included, f) created a Corporation for the Protection of Bank Savings (Corporación de Proteccion del Ahorro Bancario - COPAB in Spanish) a non-government public person separate from the Bank, to assist entities in crisis, to conduct administrative liquidations, manage the Funds for Guarantee of Bank Deposits, and pay deposits insurance.

In accordance to this norm, the main functions of this institution are the following:

a) to issue currency notes and coins and the right to redeem notes and coins in all of the Republic, b) the right to use monetary instruments, exchange and credit that are necessary to achieve goals in article 3, c) act as a economic advisor, banker and financial representative for the Government, d) manage the Government’s international reserves, e) act as a bank of the financial intermediaries, f) represent the Government of the Republic of Uruguay in international financial organizations and execute financial transactions related to the participation of the Government in these organizations, g)elaborate norms and supervision of those regulations on the part of public and private entities that form part of the financial system.  For this purpose, it can authorize or prohibit, entirely or in part, operations in general or in particular, and also establish norms for prudence, good management and working methods and will inform, in the case of public entities, the Executive Branch on these issues, h) foster development of education, and a economic and financial culture (this was incorporated by article 334 of Act No. 18.996 on November 7, 2012).

Act No.18.643 on February 9, 2010 again modified to some extent the charter, amended in Act 18.401, that refers to entities supervised by the Superintendency of Financial Services (refers to issues such as financing, incorporating to the systems of control physical and legal entities that carry out certain types of activities and regulating the activities of certain legal entities with non-financial line of business, such as consumer cooperatives and civil associations.  The type of entities supervised by the Superintendency of Financial Services was modified, and the Superintendency was granted the authority to include in their regulation and control regime others entities not included in the act.

The Act No. 18.670 de July 20, 2010 introduced new important modifications to the Charter, such as changing the amount of Directors to three members, the creation of a Macroeconomic Coordinating Committee (with participation of the Minister of Economy and Finances), and a Committee of Monetary Policy within the scope of the Bank with specific functions of monetary issues.


In addition to the abovementioned norms, equally important were other provisions.  Although they did not imply a formal modification to the body of norms, they granted diverse functions to the Central Bank.  The most important follow.
Act No.16.713 on September 3, 1995 (Titles I, II, IV and VII) granted competencies to the Central Bank related to pension savings funds and administrators and insurance companies.
Act No. 16.774 of September 27,1996 regulated the activities of financial companies that manage Investment Funds, modified by Act 17202 of September 24, 1999,
Act No. 17.703 of October 27, 2003, a law of trusts established within the framework of the Central Bank of Uruguay, a public register that identifies professional fiduciaries, physical or legal entities, and it also granted the institution with the same authority over the financial fiduciaries, detailed in Decree-Act No. 15.322 on September 18, 1982 and its modifications. Norm modified by Act No. 18.127 on May 12, 2007.
Act No. 17.835 of September 23, 2004 on prevention and control of money laundering and terrorist financing requires communicating to the entity’s Information and Financial Analysis Unit,  transactions deemed unusual, transactions that have no business or apparent lawful purpose, or that are unusually complex or unjustified, as well as financial transactions that involve assets suspected to be proceeds of illicit activities, in order to prevent money laundering crimes described in Articles 54 and following of Decree-Act No. 14.294 of October 31, 1974, -incorporated by Article 5 of Act No. 17.016, of October 22, 1998 with the modification introduced by Act No. 17.343, of May 25, 2001 and prevent at the same time the crime categorized in Article 16 of the present Act.  This norm underwent modifications in Act No. 18.494 on June 5, 2009.
Act No. 18.573 of September 13, 2009 regulated compensation and payment systems, granting the Central Bank the responsibility to act as the system regulator.
Act No. 18.627 of December 2, 2009 refers to the Stock Market and BCU function to seek transparency of operations, competitiveness and to keep the stock market functioning properly for the adequate information for investors and reduction of systemic risk. 

Act No. 18.812 on September 23, 2011, established norms to guarantee protection from misuse of personal data stored in the Center of Credit Risk of the BCU, regulated by Act No. 18.331 of August 11, 2008.
Act No. 19.210 of April 29, 2014, known as the financial inclusion act, granted the BCU with important competencies, such as issuing authorizations to operate and also assigning it the supervision over institutions that issue electronic money, requiring financial intermediaries and issuers of electronic money to provide information to the consumer, regime of use of cancellation means, responsibility with regards to Consumer Defense, among others.​​​