Decision on the Handling of Convertible Mark Banknotes and Coins Unfit for Circulation and Damaged Foreign Currency Banknotes

Based on Articles 44 and 70 of the Law on the Central Bank of Bosnia and Herzegovina ("Official Gazette of BiH", nos. 1/97, 29/02, 8/03, 13/03, 14/03, 9/05, 76/06, and 32/07), the Governing Board of the Central Bank of Bosnia and Herzegovina, at its 15th session held on November 29, 2024, adopts

DECISION on the handling of convertible mark banknotes and coins that are unfit for circulation and damaged banknotes of effective foreign currency

Article 1. (Subject) This Decision establishes the features and characteristics, as well as the procedure for handling convertible mark banknotes and coins (hereinafter: KM currency) that are unfit for circulation and damaged banknotes of effective foreign currency.

Article 2. (KM Currency Unfit for Circulation) KM currency considered unfit for circulation includes:

• worn KM banknotes,
• damaged KM banknotes,
• KM banknotes damaged due to the action of electrochemical equipment for banknote protection (hereinafter: banknotes damaged by dyeing),
• damaged KM coins,
• KM banknotes and coins that have been withdrawn from circulation,
• makulature (printing defects) of KM banknotes and coins.

Article 3. (Worn KM Banknotes) (1) Worn KM banknotes are banknotes that have deteriorated due to use, significantly reducing the quality of paper and ink, or are unsuitable for circulation due to their appearance. (2) Commercial banks, in the process of processing and sorting KM cash, separate the worn KM banknotes from paragraph (1) of this Article and hand them over in accordance with the regulation of the Central Bank of Bosnia and Herzegovina (hereinafter: Central Bank) which establishes the procedure for handing over/taking over cash in the vaults of the Central Bank. (3) The Central Bank, through organizational forms for vault operations in main units/branches of the Central Bank (hereinafter: separated vaults), takes over worn KM banknotes from commercial banks and performs their exchange by crediting the reserve accounts of commercial banks, in full amount and without fee.

Article 4. (Damaged KM Banknotes) Damaged KM banknotes under Article 2, point b) of this Decision include:

• banknotes that have been spliced or torn into two or more parts, whose parts have been glued together or can be assembled into whole banknotes,
• banknotes from which one or more parts are missing due to damage, and
• banknotes damaged by grease, dye, etc., or which are scorched, burnt, corroded, or faded.

Article 5. (Exchange of Damaged KM Banknotes) The Central Bank will perform the exchange of damaged KM banknotes, depending on the degree of damage:

• through commercial banks, or
• directly, by submitting an application for exchange to the Central Bank.

Article 6. (Exchange of Damaged KM Banknotes in Commercial Banks) (1) Commercial banks will perform the exchange of damaged KM banknotes, provided that the applicant (natural or legal person) presents more than 60% of the KM banknote, which:

• is in one part and contains at least one serial number, or
• is in two or more parts and contains both serial numbers. (2) The commercial bank will perform the exchange of KM banknotes from paragraph (1) of this Article, in full amount and without fee. (3) The Central Bank, through separated vaults, takes over damaged KM banknotes from paragraph (1) of this Article from commercial banks and performs their exchange by crediting the reserve accounts of commercial banks, in full amount and without fee.

Article 7. (Exchange of Damaged KM Banknotes in the Central Bank) (1) If the damaged KM banknote does not meet the conditions for exchange in commercial banks under Article 6, paragraph (1) of this Decision, the commercial bank will direct the applicant to submit an application for the exchange of damaged KM banknotes to the Central Bank. (2) The application is submitted in person on Form "Application for Exchange of Damaged Currency in KM" (hereinafter: Application) which is attached to this Decision and forms an integral part of it. (3) The application is submitted to the organizational unit of the Central Bank that includes an organizational form for vault operations performing currency authentication tasks, i.e., the Treasury Department of the Sector for Monetary Operations, Foreign Exchange Reserves Management, and Cash Management of the Central Office of the Central Bank (hereinafter: Treasury Department) in Sarajevo, or the separated vault of the Main Bank of the Republika Srpska of the Central Bank of BiH in Banja Luka. (4) The applicant (natural or legal person) when handing over damaged KM banknotes for exchange is obliged to prove their identity by presenting a personal ID card or other identification document and submit the Application from paragraph (2) of this Article, stating:

• the origin of the KM banknotes,
• how the damage occurred and what happened to the missing parts,
• a description of the type of stain, contamination, and other damage on the attached KM banknote. (5) Along with the completed Application form, the applicant is obliged to provide evidence confirming the statements in the Application. (6) The Central Bank determines the authenticity and assesses the damage, or determines the existence of grounds for the exchange of damaged KM banknotes, for each individual case based on the submitted Application with attached documentation. (7) If the Central Bank determines that there are grounds for the exchange of damaged KM banknotes, it will perform the exchange. The exchange is performed in full amount and without fee, except in cases under Article 11 of this Decision. (8) If, after the assessment performed under paragraph (6) of this Article, the Central Bank determines that there are no grounds for the exchange of damaged KM banknotes, such banknotes are withdrawn and destroyed without compensation to the owner in accordance with the Law on the Central Bank of Bosnia and Herzegovina, and the applicant is notified in writing.

Article 8. (Damaged KM Coins) Damaged KM coins under Article 2, point d) of this Decision include:

• coins that have changed their authentic shape due to damage (missing one or more parts, chipped, bent, or corroded),
• coins damaged by grease, dye, corrosion, or which are scorched.

Article 9. (Exchange of Damaged KM Coins) (1) Commercial banks will perform the exchange of damaged KM coins if whole specimens of KM coins are submitted for exchange, for which it can be established that they are authentic. (2) The commercial bank will perform the exchange of coins from paragraph (1) of this Article, in full amount and without fee. (3) The Central Bank, through separated vaults, takes over damaged KM coins from paragraph (1) of this Article from commercial banks and performs their exchange by crediting the reserve accounts of commercial banks, in full amount and without fee. (4) The procedure for the exchange of damaged KM coins, in case the damaged KM coins do not meet the conditions for exchange in commercial banks as stated in paragraph (1) of this Article, and the applicant presents more than 60% of its surface area, is performed in the Central Bank in the manner specified in Article 7 of this Decision.

Article 10. (Exchange of KM Banknotes Damaged by Dyeing) The procedure for the exchange of KM banknotes damaged by dyeing is performed in accordance with the regulation of the Central Bank which establishes the exchange of damaged convertible mark banknotes whose damage resulted from dyeing due to the action of electrochemical equipment for banknote protection.

Article 11. (Complex Analysis) (1) If the Central Bank must perform a complex analysis of damaged KM banknotes and coins from Articles 7 and 9 of this Decision, the applicant will pay a fee to the Central Bank for the performed analysis, in accordance with the act of the Governor of the Central Bank in each specific case, depending on the costs incurred by the Central Bank in the analysis procedure. (2) If it is estimated that the analysis costs will exceed the nominal value of the damaged currency submitted for analysis, the complex analysis will not be performed, and the currency from paragraph (1) of this Article will be withdrawn without compensation to the applicant.

Article 12. (Exchange of KM Banknotes and Coins Withdrawn from Circulation) (1) Banknotes and coins being withdrawn from circulation may be used in cash payment transactions until the date they cease to be legal tender. (2) KM banknotes and coins that have been withdrawn from circulation and ceased to be legal tender are exchanged for KM banknotes and coins that represent legal tender suitable for circulation. (3) After the date from which the banknotes and coins from this Article cease to be legal tender for cash transactions, their exchange from natural and legal persons is performed by commercial banks, in full amount, without fee, and within the period determined by an act of the Central Bank. (4) The Central Bank takes over the banknotes and coins from paragraph (3) of this Article from commercial banks and performs the exchange with commercial banks using banknotes and coins suitable for circulation, in full amount and without fee. (5) After the expiration of the period for exchange in commercial banks, the exchange of banknotes and coins withdrawn from circulation is performed in the Central Bank, within the period determined by the Central Bank. (6) During the period from the adoption of the Central Bank's Decision determining the withdrawal from circulation for certain denominations of banknotes and coins, the Central Bank and commercial banks internally, during the processing of banknotes and coins, separate the banknotes and coins being withdrawn from circulation and do not return them in cash payments. After the date from which certain banknotes and coins cease to be legal tender for cash transactions, commercial banks are prohibited from returning them in cash payments.

Article 13. (Makulature of KM Banknotes and Coins) (1) Makulature of KM banknotes and coins are considered authentic specimens of KM banknotes and coins that were produced with certain technical errors by the authorized organization for the production of KM banknotes and coins and as such entered circulation. (2) In the case of makulature KM banknotes, defects consist of incomplete or poor printing, ink bleeding or lack of prescribed colors, absence of series mark or number, or any other similar deviation from the characteristics of the KM banknote established by the regulations of the Central Bank on basic characteristics of banknotes. (3) In the case of makulature KM coin specimens, defects consist of weak or completely omitted imprint of the denomination mark or any other detail, deviation from the prescribed size or thickness of the KM coin, and similar. (4) Makulature of KM banknotes and coins are recorded in minutes in the separated vaults of the Central Bank and sent for analysis to the Treasury Department and separated vault where currency authentication tasks are performed. (5) If analysis establishes that the case involves makulature of KM banknotes or coins, the Central Bank performs the exchange with banknotes or KM coins suitable for circulation, in full amount and without fee.

Article 14. (KM Banknotes and Coins Damaged Intentionally) If the Central Bank has proof, knowledge, or justified reason to believe that KM banknotes or KM coins were intentionally damaged, such currency will be withdrawn from circulation without compensation to the applicant.

Article 15. (Damaged Banknotes of Effective Foreign Currency) (1) The Central Bank does not perform the exchange of damaged banknotes of effective foreign currency. (2) Damaged banknotes of effective foreign currency include:

• banknotes that have been in circulation for a long time and have deteriorated due to frequent use, provided that security elements and authenticity features are visible and can be verified,
• banknotes glued with adhesive or whole banknotes spliced or torn into two or more parts, whose parts are assembled into one banknote with adhesive or sticky tape, and it can be established that all parts belong to the same banknote,
• banknotes written on or drawn on, splashed with paint or liquid that leaves a mark on banknotes, and scorched banknotes,
• banknotes that are not whole, i.e., banknotes from which a part is missing. (3) If, during the handover to the Central Bank of banknotes of effective foreign currency by commercial banks in the process of control, processing, and counting in the Central Bank, damaged banknotes of effective foreign currency are found in the deposit of banknotes of effective foreign currency suitable for circulation, such banknotes will be returned to the commercial bank in accordance with the regulation of the Central Bank which establishes the procedure for handing over/taking over cash in the vaults of the Central Bank. (4) The exchange of damaged effective foreign currency is performed by central banks, i.e., issuing banks of countries that issued the effective foreign currency.

Article 16. (Internal Regulations) The organizational form of the Central Office of the Central Bank for accounting and finance tasks will prescribe the method of accounting recording of transactions from this Decision.

Article 17. (Forms) The attachment to this Decision is Form "Application for Exchange of Damaged Currency in KM", which forms an integral part of it.

Article 18. (Entry into Force and Publication) (1) This Decision enters into force on the eighth day from the date of publication in the "Official Gazette of BiH". (2) This Decision will also be published in the "Official Gazette of the Federation of BiH", "Official Gazette of the Republika Srpska", and "Official Gazette of the Brčko District of BiH".

Article 19. (Termination of Validity) With the entry into force of this Decision, the Decision on the handling of convertible mark banknotes and coins that are unsuitable for circulation and damaged banknotes of effective foreign currency ("Official Gazette of BiH", no. 17/17) ceases to be valid.

Chairperson Number: UV-122-02-1-2091-8/24 Governing Board of the Central Bank Sarajevo, November 29, 2024 Bosnia and Herzegovina GOVERNOR dr. Jasmina Selimović Receiving Stamp

APPLICATION FOR EXCHANGE OF DAMAGED CURRENCY IN KM

Damaged currency in KM is exchanged after the assessment of damage and fulfillment of conditions for exchange in accordance with the regulation on the handling of convertible mark banknotes and coins that are unfit for circulation and damaged banknotes of effective foreign currency.

Personal Visit: 🞏 Central Office Central Bank of Bosnia and Herzegovina Maršala Tita 25 71000 Sarajevo +387 33 278 100 🞎 Main Bank of the Republika Srpska Central Bank of BiH Vidovdanska 19 78 000 Banja Luka +387 51 243 600

DATA OF THE APPLICANT: Name and Surname/Name: Street and Number/Headquarters: Postal Code: Place/City: Country: Date of Birth: Telephone: Mobile: E-mail address: Name and number of identification document, name of the issuing authority, and date of issuance on the basis of which the identity of the applicant was established:

TYPE OF CURRENCY: ☐ banknotes ☐ coins SPECIFICATION OF DAMAGED CURRENCY: DENOMINATION QUANTITY DENOMINATION QUANTITY Total Value:

THE DAMAGED CURRENCY IS: ☐ personal property ☐ property of person __________________ EXPLAIN THE ORIGIN OF THE CURRENCY HOW DID THE DAMAGE OCCUR? WHAT HAPPENED TO THE MISSING PARTS? DESCRIBE THE TYPE OF STAIN, CONTAMINATION, AND OTHER DAMAGE ON THE PRESENTED BANKNOTE ATTACHMENT Confirmation from the competent institution regarding the event that caused the damage, if available.

Under full material and criminal responsibility as the applicant, I confirm the accuracy of all stated data with my own signature. With my own signature, I confirm that I am aware that the Central Bank, if it determines that there are no grounds for the exchange of damaged KM cash, withdraws and destroys the damaged cash I submitted for exchange without compensation.

Signature of the applicant: The Application is submitted in two original copies, one of which is retained by the Central Bank of Bosnia and Herzegovina, and the other by the applicant as confirmation of the submitted application.

FILLED BY THE CENTRAL BANK OF BOSNIA AND HERZEGOVINA Protocol Number: _______________ Date of Receipt: _______________ ☐ exchanged immediately ☐ temporarily retained for assessment ASSESSMENT OF DAMAGE AND EXISTENCE OF GROUNDS FOR EXCHANGE: a) ☐ fully b) ☐ partially c) ☐ does not meet EXPLANATION Signature of the official Central Bank

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