Board Resolution No. 060/2015: New Regulation for the Administration of Monetary Material

BOARD RESOLUTION NO. 060/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT — NEW REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL.

HAVING SEEN:

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 modifications.

The Regulation for the Administration of Monetary Material, approved by Board Resolution No. 46/2009 of April 14, 2009 and its modifications.

Report BCB-GOM-STES-INF-2015-40 of April 23, 2015, from the Monetary Operations Management.

Report BCB-GAL-SANO-INF-2015-172 of April 24, 2015, from the Legal Affairs Management.

CONSIDERING:

That pursuant to Article 24 of Law No. 1670, all entities of the Public Sector must deposit their funds in fiscal accounts of the Central Bank of Bolivia or in the entity delegated by it.

That as established in Article 37 of Law No. 1670, the Issuing Entity shall be the custodian of liquid reserves intended to cover the legal reserve and attend the payment system and other operations with the BCB of financial intermediation entities subject to authorization and control by the Institution for the Regulation of Banks and Financial Entities, being able to delegate the custody of these deposits to the same and other financial entities, according to regulation.

That as determined by Article 38, literal a) of Law No. 1670, the Central Bank of Bolivia may receive demand and time deposits in national and foreign currency from financial intermediation entities.

That within the framework of the aforementioned, the Board of Directors of the Central Bank of Bolivia, as established by Law No. 1670 in its Article 54, literals a) and o) and pursuant to what is provided by the Statute of the Issuing Entity in its Article 11, numerals 1) and 29), is empowered to issue norms and adopt general decisions that are necessary for it to fulfill the functions, competencies, and powers assigned by the Law.

That the Monetary Operations Management, through Report BCB-GOM-STES-INF-2015-40, recommends the modification of the Regulation for the Administration of Monetary Material, and requests the Legal Affairs Management to perform the corresponding legal analysis.

La Paz, April 28, 2015

That the Legal Affairs Management, through Report BCB-GAL-SANO-INF-2015-172, concludes that the modification of the Regulation for the Administration of Monetary Material in the terms expressed in Report BCB-GOM-STES-INF-2015-40 is legally appropriate, since it is supported by the current legal framework, being the competence of the Board of Directors 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 the inciso o) of Article 54 of Law No. 1670 and numeral 29 of Article 11 of the BCB Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the New Regulation for the Administration of Monetary Material, in its VII chapters and 29 articles, which in the annex, forms an integral part of this Resolution.

Article 2.- This Regulation shall enter into force as of May 4, 2015.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

ANNEX

REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL

CHAPTER I OBJECTIVE, TERMS AND DEFINITIONS

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

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

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 shall be applied to Financial Intermediation Entities holding Current Accounts and Reserve Accounts or Reserve Accounts, that make deposits and withdrawals in the aforementioned accounts, as well as to operations carried out with Public Sector entities and to deposits in current fiscal 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.

Unfit Banknote. A mutilated, torn banknote, 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.

Coin Box. A set of coins of the same denomination, which have been packaged in defined quantities for each denomination, by the mint.

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

v. EBP. Public Financial Intermediation Entity.

vi. Bundle of banknotes. A 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. A set of banknote packages that are processed and classified in reading-sorting equipment, grouped by institution and ATM.

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

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

xi. Coin Package. A set of one thousand coin pieces of the same denomination, ordered in ten cylinders 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.

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 shall 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.

Deposits of coins in national currency require prior authorization from the GTES, provided that 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 as fit and unfit. Banknote packages in US Dollars shall 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 contemplate 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 status as legal tender and will be demonetized and disqualified.

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

i. Name and logo of the depositing Financial Entity.

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

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 the formation of the package.

The bands of the bundles of national currency banknotes contained in the packages must carry 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 through an external circular of the General Management.

Article 7. (Packaging of banknotes). Banknote packages must be packaged with shrink wrap that carries the logo of the depositing Financial Entity. No other tying and packaging material will be accepted.

Article 8. (Packaging and identification of coin deposits). Coins to be deposited must be packaged in cylinders containing one hundred pieces of the same denomination; ten of these cylinders packaged in shrink wrap will form a package of one thousand pieces. Likewise, for identification, they must carry labels of the Financial Entity with the same information requested for banknote packages.

Article 9. (Reception). Deposits will be received in the security areas of the GTES, where the following will be verified:

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

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.

The correct packaging in shrink wrap.

iv. In the case of coin deposits, the existence of ten cylinders 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 reception 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 reception 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 using armored vehicles.

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

CHAPTER III COUNTING OF DEPOSITED MONETARY MATERIAL

Article 13. (Counting Schedule). 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 (3) business days in advance, for the designation of representatives (observers) who will witness and validate the process and its results.

Article 14. (Counting of unfit banknotes). Banknote packages in national currency classified as unfit will be recounted and verified by the BCB, or by the company it determines, in BCB facilities and in the presence of observers from the Financial Entity that made the deposit of the packages.

If during the counting process the equivalent of more than 10% of fit banknotes is found in each package or batch of banknotes, the return of the total of the recounted monetary material will be processed on the counting date.

Article 15. (Delivery and registration of recounted monetary material). The persons responsible for the counting will deliver to the central vault of the BCB the monetary material classified in fit banknote packages and unusable banknote packages.

Unusable banknote packages will be physically transferred to the unusable banknote storage for subsequent destruction. Fit banknote packages will remain in the vault.

Article 16. (Differences in counting). If surpluses, shortages, or counterfeit banknotes are established in the counting process of the monetary material, charges and credits will be made in the current and reserve account or reserve account of the corresponding Financial Entity, within a maximum period of one (1) business day after the differences are established.

Article 17. (Counting of fit banknotes). The BCB may determine the verification and counting of banknote packages classified as fit deposited by Financial Entities, applying the same procedures established in Article 14 of this Regulation for the counting of unfit banknote packages.

If during the counting process the equivalent of more than 10% of unfit banknotes is found in each package or batch of banknotes, the return of the total of the recounted monetary material will be processed on the counting date.

CHAPTER IV WITHDRAWAL OF MONETARY MATERIAL

Article 18. (Withdrawal of cash by Financial Entities). Financial Entities may withdraw cash in national currency and United States Dollars charged to their current and reserve accounts or reserve accounts.

In the case of national currency, the BCB may make the delivery of monetary material in localities in the interior of the country, according to the request of the Financial Entity and availability of resources in the EBP.

The quantities to be withdrawn in banknotes correspond to a package as a minimum, and in the case of coins, to a box or bag.

Article 19. (Delivery Priority). The monetary material to be delivered will preferably be that deposited by the same Financial Entity. If there are no packages from the same Financial Entity in the requested denomination, the GTES will deliver packages deposited by another Financial Entity or belonging to the BCB. The Financial Entity making the withdrawal may request the counting and verification of the monetary material in the presence of observers from the Financial Entity listed on the labels.

Article 20. (Withdrawal in the EBP). Financial Entities may make withdrawals of monetary material in national currency from the EBP, according to what is established in the Contract and in the respective Guides.

Article 21. (Collection of funds in custody). The BCB may, at any time, withdraw from the EBP monetary material corresponding to funds in custody according to what is established in the Contract for the Provision of Financial Operations and Services to the BCB and in the respective Guides.

Article 22. (Sending remittances abroad). The General Management of the BCB will authorize in writing the sending of remittances abroad, composed of packages of US Dollars deposited by Financial Entities for credit to the accounts of the Issuing Entity.

Prior to the sending of the remittance abroad, the GTES, in the presence of the observer of the depositing Financial Entity, will verify that the logo of the depositing Financial Entity is present on all bands of each bundle of the banknote package and that the label corresponds to the same Entity.

Article 23. (Differences in verification of remittances abroad). The BCB will proceed to the accounting regularization of differences due to shortages, surpluses, and counterfeit banknotes in remittances abroad, as established by the Federal Reserve of the United States of America, through charges or credits in the current and reserve account or reserve account of the Financial Entity identified on the band or in the documentation sent by the Federal Reserve, within a term of one (1) business day of receiving the supporting documentation. In duly justified cases, this term may be extended with prior authorization from the GTES.

CHAPTER V FEES

Article 24. (Fees for movements in national currency). Financial Entities may make daily movements of cash in national currency with the BCB free of charge. From the second cash movement, the BCB will charge a commission according to the prevailing Service Tariffs.

Article 25. (Fees for movements in foreign currency). Movements in cash in foreign currency that Financial Entities make with the BCB are subject to a commission, as established in the prevailing Service Tariffs.

CHAPTER VI REGISTRATION AND CONTROL OF MONETARY MATERIAL

Article 26. (Registration). The registration of monetary material in the BCB Treasury will be done by sites, and each site will generate daily reports of its holdings.

Article 27. (Control). In the central vault and auxiliary treasury, the control of holdings will be at the level of packages of one thousand pieces for banknotes, and at the level of boxes for coins.

Fractionated monetary material will be registered and controlled through fractional boxes.

CHAPTER VII OTHER OPERATIONS WITH MONETARY MATERIAL

Article 28. (Deposits to fiscal accounts). The BCB will receive deposits in national currency and US Dollars, for credit to fiscal accounts under its administration, in schedules established in an External Circular of the General Management.

Article 29. (Attention to Payment Orders and Management Checks). Payment orders and management checks issued by the BCB may be collected by beneficiaries in Treasury boxes of the Institution, according to a circular of the General Management.

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