Board Resolution No. 061/2015 Approving the New Regulation on Monetization, Distribution, and Destruction of Monetary Material

BOARD RESOLUTION NO. 061/2015 SUBJECT: MONETARY OPERATIONS MANAGEMENT - APPROVES NEW REGULATION ON MONETIZATION, DISTRIBUTION, AND DESTRUCTION OF MONETARY MATERIAL

SEEN: The Political Constitution of the State promulgated on February 7, 2009. Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB). The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005 and subsequent modifications. The Regulation on Monetization, Distribution, and Destruction of Monetary Material, approved by Board Resolution No. 117/2009 and its modifications. Report BCB-GOM-STES-INF-2015-40 of April 23, 2015, from the Monetary Operations Management. Report BCB-GAL-SANO-INF-2015-171 of April 24, 2015, from the Legal Affairs Management.

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, are: to determine and execute monetary policy, execute exchange rate policy, regulate the payment system, authorize the issuance of currency, and administer international reserves.

That by virtue of what is provided in articles 1 and 3 of Law No. 1670, the BCB is the sole monetary and exchange 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, 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 Board to authorize and supervise the printing, issuance, and destruction of monetary material, being empowered to issue the norms and adopt the general decisions necessary for its compliance.

That pursuant to article 30 of Law No. 1670, all financial intermediation entities and financial services, 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 monetary, exchange, and payment system authority.

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

That by Board Resolution No. 070/2012, article 9 of the Regulation on Monetization, Distribution, and Destruction of Monetary Material was approved to be modified, effective from July 2, 2012.

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

That the Legal Affairs Management through Report BCB-GAL-SANO-INF-2015-171 concludes that the modification of the Regulation on Monetization, Distribution, and Destruction of Monetary Material in the terms expressed in Report BCB-GOM-STES-INF-2015-40 is legally appropriate, as it is supported by the current legal framework, being the competence of the Board 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 BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the New Regulation on Monetization, Distribution, and Destruction of Monetary Material, in its 5 chapters and 18 articles, which in the annex, forms part of this Resolution.

Article 2.- This Regulation will enter into force from May 4, 2015.

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

ANEX REGULATION ON MONETIZATION, DISTRIBUTION, AND DESTRUCTION OF MONETARY MATERIAL

CHAPTER I OBJECT AND DEFINITIONS

Article 1.- (Object) The purpose of this Regulation is to regulate the monetization, distribution, demonetization, and destruction of monetary material.

Article 2.- (Definitions) ASFI: Financial System Supervision and Control Authority. BCB: Central Bank of Bolivia. Unfit Banknote: Mutilated, torn banknote, with impressions or writings foreign to its original condition, or that falls within the category of banknotes not fit 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. Demonetization: Process by which Boliviano banknotes and coins are withdrawn from legal circulation. EBP: Banking Financial Intermediation Entity GAL: Legal Affairs Management. GTES: Treasury Management. Monetization: Privative function of the Central Bank of Bolivia as the issuer of the Boliviano to put into circulation banknotes and coins of legal and mandatory course with unlimited liberatory power.

CHAPTER II MONETIZATION OF BANKNOTES AND COINS

Article 3.- (Authorization of monetization) The BCB Board, through an express resolution, will authorize the monetization of monetary material based on reports from the GTES and the GAL, according to the issuance or storage requirements determined by the GTES.

Article 4.- (Monetization certificate) The monetization authorized by the Board will be recorded in an act signed by a Director designated by the BCB Board, the General Manager, the Treasury Manager, and the Submanager of Monetary Material Operations.

Article 5.- (Registration of monetization) The GTES will register the monetization of banknotes and coins, transferring accountingly the nominal value of each of the denominations of "Monetary Material in Warehouses" to the "Central Vault" account.

Article 6.- (Dissemination) Prior to the circulation of a new family, series of banknotes, or a new coinage, the main characteristics of this monetary material will be disseminated.

CHAPTER III DISTRIBUTION OF MONETARY MATERIAL

Article 7.- (Distribution) The GTES will put monetary material into circulation through the financial intermediation system, its own offices, or other distribution mechanisms authorized by the Board. The General Management will determine and implement in each case the most suitable mechanisms for the efficient distribution of monetary material in the economy. The GTES, through the General Management, will present to the Board a semi-annual program for the distribution of monetary material.

Article 8.- (Distribution structure) The GTES will determine the cut structure for the distribution of monetary material based on public requirements, the cut structure of unfit and available monetary material, and other factors.

Article 9.- (Distribution of lower denomination banknotes to ATMs) Financial entities that have two-tray automatic teller machines are obliged to distribute ten or twenty Boliviano banknotes in one tray and fifty or one hundred Boliviano banknotes in the other.

Financial entities that have three-tray automatic teller machines are obliged to distribute ten and twenty Boliviano banknotes, and fifty or one hundred Boliviano banknotes.

Financial entities that have four or more tray automatic teller machines are obliged to distribute, in at least seventy percent of them, ten, twenty, fifty, and one hundred Boliviano banknotes. In the remaining automatic teller machines with four or more trays, financial entities are obliged to distribute ten, twenty, fifty, or one hundred Boliviano banknotes.

Financial entities, for control purposes, must inform the ASFI in detail about the locations and ATMs where foreign currency is distributed.

Financial entities must identify in a visible place for the public and their users, the ATMs that dispense Bolivianos and foreign currency.

The BCB will establish the periodicity and format of the report for control and supervision by the ASFI.

Article 10.- (Sending monetary material remittances to the EBP) The BCB Presidency will authorize in writing the sending of monetary material remittances in national currency and foreign currency to the EBP, consisting of boxes of Boliviano banknotes and coins and packages of American Dollars.

Monetary material in national currency will be sent to the EBP for storage or distribution.

In the case of foreign currency, the sent monetary material will be destined for sale, on behalf of the BCB.

CHAPTER IV WITHDRAWAL AND DESTRUCTION OF MONETARY MATERIAL

Article 11.- (Withdrawal of monetary material from circulation) After verifying the monetary material sent as unfit by financial institutions, the GTES will proceed to withdraw said monetary material for its subsequent destruction. This verification may be carried out by sampling, according to technical and statistical criteria defined by the GTES. The verification may be delegated to an entity qualified for this effect.

Article 12.- (Withdrawal due to design change) The BCB may withdraw from circulation monetary material whose substitution has been decided due to a change in design, family, or substrate, following the procedure used for the withdrawal of unfit monetary material.

Article 13.- (Destruction) The monetary material withdrawn from circulation, after being rendered useless, will be physically destroyed in the Treasury area, using mechanisms that eliminate the possibility of reconstruction or reuse.

Article 14.- (Supervision) The verification of the monetary material to be destroyed will be carried out by a group composed of the Treasury Manager or a GTES employee designated by him, the Submanager of Monetary Material Operations, the Person in Charge of the Unfit Banknotes Area, a representative designated by the General Manager, and a Notary Public. These last two must supervise the complete destruction process and record it.

In each destruction session, the corresponding Act will be drawn up, recording the cuts, number of packages, number of pieces, value of the destroyed material, and the sampling verification of said material. The Act will be signed by all participants.

Article 15.- (Destination of waste) The waste from destroyed banknotes will be deposited in places determined for this type of waste by the Autonomous Municipal Governments or will be destined for other uses with the authorization of the General Management. The use of waste from destroyed coins will be determined and authorized by the General Management.

CHAPTER V OTHERS

Article 16.- (Treasury Management Reports) The GTES, through the General Management, will submit semi-annual reports to the Board concerning existing balances of monetary material, evolution of its distribution, quality of monetary material in circulation, results of banknote and coin destruction processes, and other aspects related to the management of monetary material.

Article 17.- (Reproduction of monetary material images) The partial or total reproduction of images of monetary material will only be permitted by any natural or legal person when the dimension of the reproduced image is at least 50% larger or smaller than the dimensions of the original monetary material and the material used for the reproduction does not generate confusion with the original material.

Article 18.- (Specimens or samples without value) The BCB authorities and related entities. The GTES may send specimens or samples without value to other Central Banks. The General Management will expressly authorize the delivery of specimens and samples without value.