Banco Central de Bolivia

Directorate

BOARD RESOLUTION NO. 020/2016

SUBJECT: TREASURY MANAGEMENT – NEW REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL.

VISTOS:

Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia.

The Statute of the Central Bank of Bolivia approved by Board Resolution No. 128/2005 of October 21, 2005 and its amendments.

The Regulation for the Administration of Monetary Material, approved by Board Resolution No. 60/2015 of April 28, 2015 and its amendments.

The Reports from the Treasury Management BCB-GTES-SAMM-DAMM-INF-2016-7 and BCB-GTES-SAMM-DAMM-INF-2016-14 of January 15 and 29, 2016, respectively.

The Reports from the Legal Affairs Management BCB-GAL-SANO-DLBCI-INF-2016-12 and BCB-GAL-SANO-DLBCI-INF-2016-25 of January 18 and February 1, 2016, respectively.

CONSIDERING:

That the Political Constitution of the State establishes in its article 328 that the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by Law, include: determining and executing monetary policy, executing exchange rate policy, regulating the payment system, authorizing the issuance of currency, and administering international reserves.

That pursuant to articles 1 and 3 of Law No. 1670, the BCB is the sole monetary and exchange rate authority of the country with administrative, technical, and financial competence and specialized normative faculties of general application, being empowered to formulate policies in monetary, exchange rate, and payment system matters.

That the aforementioned Law in its articles 10, 11, 13, and 54, subsections a), o), and m), establishes the functions of the BCB regarding the issuance of banknotes and metallic coins, as well as the attributions of the Directorate to authorize and supervise the printing, issuance, and destruction of monetary material, being empowered to issue norms and adopt general decisions necessary for its compliance.

That pursuant to article 30 of Law No. 1670, all financial intermediation and financial service entities, whose operation is authorized by the Superintendence of Banks and Financial Entities, are subject to the normative competence of the BCB, with respect to their relationship as the monetary, exchange rate, and payment system authority.

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That article 67 of the Statute of the Central Bank of Bolivia establishes that the Treasury Operations Management is responsible for establishing the requirements for the acquisition, distribution, destruction, and administration of monetary material.

That the Treasury Management through Reports BCB-GTES-SAMM-DAMM-INF-2016-7 and BCB-GTES-SAMM-DAMM-INF-2016-14, recommends the modification of the Regulation for the Administration of Monetary Material in order to address instructions from the Directorate.

That the Legal Affairs Management through Report BCB-GAL-SANO-DLBCI-INF-2016-12 and BCB-GAL-SANO-DLBCI-INF-2016-25 concludes that the modification of the Regulation for the Administration of Monetary Material in the terms of Reports BCB-GTES-SAMM-DAMM-INF-2016-7 and BCB-GTES-SAMM-DAMM-INF-2016-14 does not contradict the current legal framework as it is legally appropriate, being the competence of the Directorate of the Issuing Entity to consider its approval by two-thirds of the votes of all its members, in accordance with what is provided in subsection o) of article 54 of Law No. 1670 and numeral 29 of article 11 of the BCB Statute.

THEREFORE,

THE DIRECTORATE OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the new Regulation for the Administration of Monetary Material, in its VIII chapters and 30 articles, which is attached and forms part of this Resolution.

Article 2.- This Regulation will enter into force from February 15, 2016.

Article 3.- Repeal from February 15, 2016 the Regulation for the Administration of Monetary Material, approved by Board Resolution No. 60/2015 of April 28, 2015 and its amendments.

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, February 2, 2016

Marcelo Zabalaga Estrada

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Sergio Velarde Vera
Ronald Polo Rivero
Abraham Pérez Alandia
Reynaldo Yujra Segales
Álvaro Rodríguez Rojas

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ANNEX

MODIFIED REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL

CHAPTER I

OBJECT, TERMS, AND DEFINITIONS

Article 1. (Object of the Regulation). This Regulation aims to regulate:

i. The deposit, administration, and withdrawal of monetary material, arising from operations carried out by Financial Intermediation Entities holding Current and Reserve Accounts or Reserve Accounts within the framework of what is established in Title II, Chapter VI of Law No. 1670.

ii. The receipt of cash deposits destined for fiscal accounts, within the framework of what is established in Title II, Chapter IV, article 24 of Law No. 1670, as well as the attention of fund withdrawals by the issuance of payment orders or management checks according to what is established in Chapter VII of this regulation.

Article 2. (Scope of Application). This Regulation will be applied to Financial Intermediation Entities holding Current and Reserve Accounts or Reserve Accounts, which make deposits and withdrawals in the aforementioned accounts, as well as to operations carried out with entities of the Public Sector and to deposits in fiscal current accounts made by the public. It also applies to fund withdrawals by the issuance of payment orders or management checks of the BCB.

Article 3. (Terms and Definitions). The terms and definitions of this Regulation are as follows:

i. BCB. Central Bank of Bolivia.

ii. Unfit Banknote. Banknote mutilated, torn, with impressions or writings foreign to its original condition, or that falls within the category of banknotes not suitable for circulation, according to the range of the degree of deterioration of "Boliviano" banknotes in categories 4, 5, and 6, provided it clearly retains its two signatures and a serial number.

iii. Coin Canister. Set of coins of the same denomination, which have been packaged in defined quantities for each denomination by the mint.

iv. Band. Paper piece that covers each bundle of banknotes, allowing their separation from other bundles.

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v. EBP. Public Financial Intermediation Entity.

vi. Bundle of Banknotes. Set of one hundred banknote pieces of the same denomination, covered by a band.

vii. GTES. Treasury Management of the Central Bank of Bolivia.

viii. Batch of Banknotes. Set of banknote packages that are processed and classified in reading-sorting equipment, grouped by institution and ATM.

ix. Label. Tag containing data that allows identifying the Financial Entity that formed the package of banknotes or coins and which is adhered to it.

x. Banknote Package. Set of one thousand banknote pieces of the same denomination, ordered in ten bundles of one hundred pieces each.

xi. Coin Package. Set of one thousand coin pieces of the same denomination, ordered in ten canisters of one hundred coins each.

xii. Site. The physical place, enabled in the Treasury Module, in which monetary material is stored and through which it transits.

xiii. SOMM. Sub-management of Monetary Material Operations dependent on the Treasury Management of the Central Bank of Bolivia.

xiv. Inutilization. Process by which unfit banknotes are perforated, after being recounted and verified, losing their monetary value.

xv. Direct Inutilization. Process by which unfit banknotes are perforated without passing through the stages described in articles 13 and 14 of this regulation.

CHAPTER II

DEPOSITS OF MONETARY MATERIAL

Article 4. (Deposits). Financial Entities may make cash deposits in the BCB in national currency or United States dollars in the schedules defined by the BCB through an express circular issued by its General Management.

Banknote deposits will be made in packages containing one thousand pieces of banknotes of a single denomination, ordered in ten bundles of one hundred pieces each. In order to guarantee the circulation of new and good condition banknotes of 10 and 20 Bolivianos, only unfit banknotes in these denominations may be deposited.

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Coin deposits in national currency require prior authorization from the GTES, provided they do not affect the availability in circulation of the respective denomination.

Article 5. (Classification). Banknote packages for deposit in national currency must be classified by the Financial Entity into fit and unfit. Banknote packages in US dollars will not be classified.

To determine the degradation of banknotes in circulation, the GTES, with the approval of the General Management, will establish a range of six categories that contemplates different states of deterioration. Categories 4, 5, and 6 will be considered unfit for circulation.

Likewise, metallic coins that are perforated, filed, or altered will lose their quality of legal tender and will be demonetized and disabled.

Article 6. (Identification of deposits). The labels of fit banknote packages will be white. Unfit banknote packages must carry brown labels. In both cases, the following information must be recorded:

i. Name and logo of the depositing Financial Entity.

ii. Name or seal of the Company that formed the package, if applicable.

iii. Full name, signature, and seal of the person who formed the package.

iv. Denomination of the monetary material and amount of the package.

v. Place and date of package formation.

The bands of the bundles of national currency banknotes contained in the packages must bear the logo of the depositing Financial Entity.

The bands of the bundles of US dollar banknotes, contained in the packages deposited by Financial Entities, must have the characteristics established by the Federal Reserve of the United States, which will be communicated via external circular from General Management.

Article 7. (Packaging of banknotes). Banknote packages must be packaged with shrink wrap that bears the logo of the depositing Financial Entity. The use of any other tying and packaging material will not be accepted.

Article 8. (Packaging and identification of coin deposits). Coins to be deposited must be packaged in canisters containing one hundred pieces of the same denomination; ten of these canisters packaged in shrink wrap will form a

Banco Central de Bolivia
Directorio

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package of one thousand pieces. Likewise, for identification, they must carry labels from the Financial Entity with the same information requested for banknote packages.

**Article 9. (Receipt).** Deposits will be received in the security environments of the GTES, where the following will be verified:

i. The information contained in the labels adhered to the banknote and/or coin packages.

ii. The existence of ten bundles of banknotes in each package separated by their respective bands, which must show the logo of the depositing Financial Entity.

iii. Correct packaging in shrink wrap.

iv. In the case of coin deposits, the existence of ten canisters of the same denomination in each package.

v. Other requirements that may be defined by the General Management of the BCB through an express Circular.

**Article 10. (Registration and Custody).** Once the receipt requirements for monetary material are met, it will be registered in the treasury system and the deposit receipt will be issued, which will be signed by the depositor. The cash will be transferred to the BCB vaults for safekeeping.

**Article 11. (Deposits in the EBP).** Financial Entities may make deposits of monetary material in national currency in the EBP.

For the receipt of deposits, the EBP must comply with what is established in this Regulation, in the Contract, and in the respective Guides.

**Article 12. (Security).** The deposit and withdrawal of banknotes must be carried out by the Financial Entity through the use of armored vehicles.

The deposit and withdrawal of coins may be carried out by the Financial Entity through the use of armored vehicles.

## CHAPTER III
## COUNTING OF DEPOSITED MONETARY MATERIAL

**Article 13. (Counting Scheduling).** The BCB, through the GTES, will schedule the counting of banknote packages in national currency classified as unfit and will communicate the counting date to the corresponding Financial Entity, at least three business days in advance, for the designation of representatives (observers) to witness and validate the process and its results.