Regulatory Alerts1995-01-01
Directive No. 4/DSB/95: Monetary Readjustment for Financial Institutions
The Directorate of Banking Supervision mandates that all financial institutions convert their New Kwanza balances to the newly created Adjusted Kwanza (KZR) at a 1,000:1 ratio effective July 1, 1995. Institutions must close their NKZ records on June 30 using newly established monetary readjustment accounts, transfer the National Treasury balance to the BNA, and reopen all accounts in KZR through the conversion position account. The directive further requires immediate conversion of transit values, stamping documents with "Adjusted Kwanza", and archiving residual amounts while rounding all figures to the lower unit.
DIRECTIVE NO. 4/DSB/95 SUBJECT: FINANCIAL INSTITUTIONS MONETARY READJUSTMENT Pursuant to the Monetary Readjustment Law, the new Monetary Unit, the Adjusted Kwanza (KZR), equivalent to 1,000 (one thousand) New Kwanzas, was created. Thus, in accordance with Instruction No. 2/95 of June 23, all Financial Institutions shall, as of July 1 of the following year, convert all their values and balances expressed in New Kwanzas to Adjusted Kwanzas, including those of off-balance sheet accounts. Any necessary rounding shall be performed to the lower unit.
To standardize the procedures to be adopted, the following is established:
- The following accounts are created: 5999 - Monetary Readjustment - Conversion Position 39940 - Monetary Readjustment - National Treasury
- As of June 30, all Financial Institutions shall close their books in New Kwanzas by offsetting the accounts indicated in the preceding number. a) Example, considering that the balance of the account "Demand Deposits at the Central Bank M/N" is NKZ: 953.007.415.112.30.
DEBIT Monetary Readjustment - Conversion Position NKZ: 953.007.415.000.00 Monetary Readjustment - National Treasury
NKZ: 112.30
CREDIT Demand Deposits at the Central Bank M/N NKZ: 953.007.415.112.30 b) Example, considering that the balance of the "Special Reserve" account is NKZ: 17.515.426.972.40 DEBIT Special Reserve NKZ: 17.515.426.972.40 . CREDIT Monetary Readjustment - Conversion Position NKZ: 17.515.426.000.00
Monetary Readjustment - National Treasury NKZ: 972.40 3. Once the ledger is balanced in New Kwanzas, as exemplified, all accounts shall be reopened in Adjusted Kwanzas (KZR) through account 5999 - "Monetary Readjustment - Conversion Position". Using the examples from the preceding number a) DEBIT.
Demand Deposits at the Central Bank MIN NKZ:953.007.415.00 CREDIT Monetary Readjustment - Conversion Position NKZ: 953.007.415.00
b) DEBIT Monetary Readjustment - Conversion Position KZR: 17.515.426.00 CREDIT Special Reserve KZR: 17.515.426.00 4. The final balance of account "39940 - Monetary Readjustment - National Treasury" shall be transferred, in Adjusted Kwanzas, to the BNA, through the account "Demand Deposits at the Central Bank M/N. 5. Upon confirmation of transit values, immediate conversion shall be carried out by stamping the documents with the wording "Adjusted Kwanza", recording the new value in red on the document. The residual value supporting the reopening of books in Adjusted Kwanzas shall be properly preserved in a specific archive. DIRECTORATE OF BANKING SUPERVISION