JPRM-2022-005-M — Currency and Electronic Payment Means Regulation

Resolution No. JPRM-2022-005-M

THE MONETARY AND FINANCIAL POLICY BOARD

CONSIDERING:

That, Article 226 of the Constitution of the Republic of Ecuador prescribes that public servants and persons acting under state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law;

That, Article 227 of the same Constitution states that Public Administration constitutes a service to the community governed by principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That, Article 302, paragraph 1, above, determines that: "Monetary, credit, exchange, and financial policies shall have as objectives: 1. To supply the necessary means of payment for the economic system to operate efficiently.";

That, the first clause of Article 303 of the Constitution of the Republic determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive faculty of the Executive Branch and shall be implemented through the Central Bank of Ecuador, determining its composition;

That, Article 47.1 of the Organic Monetary and Financial Code created the Monetary and Financial Policy Board as part of the Executive Branch, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

That, Article 47.6 of the same Code, regarding the functions of the Monetary and Financial Policy Board, among others, establishes: "(...) 1. Formulate policy in the monetary sphere and observe its application by the Central Bank of Ecuador, to preserve the integrity and sustainability of the dollarization monetary system and the financial system, in accordance with the provisions of this Code; (...) 26. Those others conferred by law. (...)";

That, Article 94 of the Organic Monetary and Financial Code prescribes: "All transactions, monetary and financial operations, and their accounting records, carried out in the Republic of Ecuador, shall be expressed in United States dollars, in accordance with this Code.

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The circulation, exchange, and withdrawal of United States dollars, as well as the minting and demonetization of national fractional coinage in the Republic of Ecuador, correspond exclusively to the Central Bank of Ecuador.

The Central Bank of Ecuador is the only entity authorized to provide and manage national fractional coinage in the Republic of Ecuador, equivalent and convertible to United States dollars, backed by Reserve assets.

The currency determined in this article is a means of payment.

Currency has liberatory power and legal tender status in the Republic of Ecuador within the framework of regulations issued by the Monetary and Financial Policy Board. Under no circumstances shall the State oblige a natural or legal person of private law to receive currency other than the United States dollar.";

That, Article 97 of the aforementioned Organic Code provides: "The exchange of the currency referred to in Article 94, of any class or denomination, shall be carried out by the Central Bank of Ecuador, to the bearer and on demand, free of any charge, for currency of higher or lower denomination as requested. If the Central Bank of Ecuador temporarily lacks currency in the required denominations, it may deliver currency in values closest to those requested.

National financial system entities shall be obligated to provide currency exchange services in accordance with the terms established by the Monetary and Financial Policy Board, with the exceptions determined.";

That, Article 99 of the same Organic Code determines: "Means of payment are checks and electronic means of payment that include transfers for payment or collection, credit cards, debit cards, recharge cards, and others of similar nature, under the terms determined and regulated by the Monetary and Financial Policy Board.";

That, Article 101 of the aforementioned Code states: "Electronic means of payment shall be implemented and operated by the Central Bank of Ecuador and entities of the national financial system in accordance with the regulations issued by the Monetary and Financial Policy Board and with the authorization granted by said institution, without prejudice to other requirements established by Law.

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All transactions carried out with electronic means of payment shall be settled and, where applicable, cleared at the Central Bank of Ecuador, in accordance with the procedures established by the Monetary and Financial Policy Board."

That, Transitory Provision Fifty-Fourth above, prescribes: "Resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy Board and norms issued by control bodies shall remain in force until the Monetary and Financial Policy Board and the Financial Policy and Regulation Board resolve what corresponds, within their competencies.";

That, Chapter I: "On Currency and Money" and Chapter II: "Norms for the Management of Electronic Payment Means", of Title I: "Monetary System", of Book I: "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy Board, regulates all matters related to fractional currency exchange and electronic payment means, whose analysis and treatment correspond to this Board;

That, it is necessary to adapt the applicable regulatory norms for fractional currency exchange and for electronic payment means, including mobile payment systems; authorization and services; operation; as well as corrective measures, infractions, and corresponding sanctions;

That, it is the faculty of the Monetary and Financial Policy Board to resolve on the norms contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy Board, that relate to the monetary sphere, with the aim of incorporating such provisions into the own regulations of the Monetary and Financial Policy Board, prior to the analysis of the pertinence of each norm and provision, in a disaggregated manner;

That, the Monetary and Financial Policy Board, in an extraordinary session by mixed modality, on February 11, 2022, reviewed the proposal sent via memorandum No. BCE-BCE-2022-0028-M, of February 8, 2022, by the General Manager of the Central Bank of Ecuador to the President of the Monetary and Financial Policy Board, as well as the technical report No. BCE-SGSERV-2022-010/DNSP-2022-053/DNEM-2022-081, of February 2, 2022, and the legal report No. BCE-CGJ-017-2022, of February 7, 2022; and,

In exercise of its functions and in attention to Article 47.7 of the Organic Monetary and Financial Code, the Monetary and Financial Policy Board resolves to issue the:

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CURRENCY AND ELECTRONIC PAYMENT MEANS REGULATION

CHAPTER I: ON MEANS OF PAYMENT

SECTION I.- CURRENCY:

Art. 1.- The legal tender currency in the Republic of Ecuador is the United States dollar.

All transactions, monetary and financial operations, and their accounting records, carried out in the country, shall be expressed in United States dollars.

SECTION II.- FRACTIONAL CURRENCY EXCHANGE:

Art. 2.- The provisions contained in this section are applicable to BanEcuador, private banks, mutual savings and credit cooperatives of segment 1 of the popular and solidary financial sector, who for the purposes of this section shall be referred to as "financial entities"; as well as for the Central Bank of Ecuador within the scope of its attributions and competencies.

Art. 3.- The Central Bank of Ecuador and financial entities shall exchange, at their counters and free of charge for the citizenry, banknotes for fractional coins and vice versa, with the aim of satisfying the citizenry's demand.

Art. 4.- The citizenry shall receive in fractional coins an amount equal to that delivered for exchange. Financial entities shall carry out the exchange during their usual hours of public attention, without discrimination as to whether or not the person is a client of the entity. To carry out exchange activities and satisfy demand, financial entities shall have in their cash registers coins of various denominations in sufficient quantities.

Art. 5.- The exchange and distribution of fractional currency shall be carried out in accordance with the needs of the citizenry. Exceptionally, in case they do not have currency in the required denominations, the Central Bank of Ecuador and financial entities may deliver coins in denominations closest to those requested.

CHAPTER II: ELECTRONIC PAYMENT MEANS

SECTION I.- DETERMINATION:

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Art. 6.- The following are electronic means of payment:

a. Electronic money transfers to make payments; b. Electronic money transfers to make collections; c. Credit cards; d. Debit cards; e. Recharge cards.

Art. 7.- Electronic means of payment shall be implemented and operated by the Central Bank of Ecuador and entities of the national financial system, in accordance with the authorization granted by the Central Bank of Ecuador, without prejudice to other requirements established by current regulations.

Art. 8.- Payments made through electronic means cannot be repudiated, revoked, or left without effect by participating entities.

Art. 9.- Financial transactions carried out through electronic means of payment shall be settled at the Central Bank of Ecuador.

Art. 10.- The Central Bank of Ecuador shall establish the conditions for the settlement of transactions carried out with electronic means of payment.

CHAPTER III: CONTROL

SECTION I.- CONTROL AND STATISTICS:

Art. 11.- The Central Bank of Ecuador shall carry out control of the means of payment.

Art. 12.- The Central Bank of Ecuador shall publish quarterly on its institutional website statistics on the use of means of payment operating in the country.

GENERAL PROVISIONS

FIRST.- The Monetary and Financial Policy Board recognizes the provisions contained in Chapter I: "On Currency and Money" and Chapter II: "Norms for the Management of Electronic Payment Means", of Title I: "Monetary System", of Book I: "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy Board, as part of the monetary regulations upon which it corresponds to resolve.

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SECOND.- The procedures for the application of what is provided in this regulation shall be contained in resolutions, manuals, or instructions issued by the Central Bank of Ecuador.

SINGLE REPEALING PROVISION: Chapter I: "On Currency and Money" and Chapter II: "Norms for the Management of Electronic Payment Means", of Title I: "Monetary System", of Book I: "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy Board, are expressly repealed.

FINAL PROVISION.- This resolution shall enter into force from its issuance, without prejudice to its publication in the Official Register.

Its publication on the institutional website is entrusted to the Document Management and Archive Directorate of the Central Bank of Ecuador.

COMMUNICATE.- Given in the Metropolitan District of Quito, on February 11, 2022.

THE PRESIDENT

(Signature) TATIANA MARIBEL RODRÍGUEZ CERÓN

The aforementioned resolution was signed by Dr. Tatiana Maribel Rodríguez Cerón - President of the Monetary and Financial Policy Board, in the Metropolitan District of Quito, on February 11, 2022.- I CERTIFY.

ADMINISTRATIVE SECRETARY

(Signature) MARÍA ALEXANDRA GUERRERO DEL POZO