Board Resolution No. 062/2015 Approving the New Regulation for the Exchange and Fractioning of Monetary Material of the Central Bank of Bolivia

BOARD RESOLUTION NO. 062/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT — APPROVES THE NEW REGULATION FOR THE EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL OF THE CENTRAL BANK OF BOLIVIA.

SEEN:

The Political Constitution of the State approved by referendum on January 25, 2009, and officially published on February 7, 2009.

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

The Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005 and subsequent modifications.

The Regulation for the Exchange and Fragmentation of Monetary Material, approved by Board Resolution No. 109/2009 of September 22, 2009.

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

Report BCB-GAL-SANO-INF-2015-170 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 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 powers of general application, being empowered to formulate policies in monetary, exchange, and payment system matters.

That article 13 of Law No. 1670 provides that the BCB, banks, and all financial intermediation institutions are obliged to exchange deteriorated or mutilated banknotes, provided that these clearly retain their two signatures and a serial number.

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

That the Monetary Operations Management through Report BCB-GOM-STES-INF-2015-40, recommends the modification of the Regulation for the Exchange and Fragmentation 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-2015-170 concludes that the modification of the Regulation for the Exchange and Fragmentation 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 Statute of the BCB.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the New Regulation for the Exchange and Fragmentation of Monetary Material, in its III chapters and 8 articles, which in the annex, forms an integral part of this Resolution.

Article 2.- This Regulation will 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.

La Paz, April 28, 2015

ANNEX

REGULATION FOR THE EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL

CHAPTER I OBJECT AND SCOPE OF APPLICATION

Article 1. (Object). This Regulation aims to regulate the exchange and fragmentation operations of Boliviano banknotes that must be carried out by all Financial Intermediation Entities holding Current and Reserve Accounts or Reserve Accounts.

Article 2. (Scope of Application). This Regulation applies to all Financial Intermediation Entities holding Current and Reserve Accounts or Reserve Accounts, whose operation is authorized by the Authority for the Supervision of the Financial System (ASFI), established throughout the national territory.

CHAPTER II EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL

Article 3. (Exchange). Financial Intermediation Entities are obliged to exchange deteriorated or mutilated Boliviano banknotes, provided that these clearly retain their two signatures and a serial number.

Article 4. (Fragmentation). Financial Intermediation Entities, in all their branches and agencies within the national territory, are obliged to fragment Boliviano banknotes into other banknotes of lower denominations or into coins.

Article 5. (Categories and limits of fragmentation). The following categories and limits are established for the fragmentation of monetary material:

No. Categories Fragmentation Limits

1. General public and small businesses Up to 10 banknotes of higher denomination for banknotes of lower denomination and up to 100 coins in each of the different denominations.
2. Medium and large operators of the public or private sector (commercial chains, supermarkets, gas station associations, pharmacy chains, toll service companies, and others) a) Directly and weekly through the Central Bank of Bolivia (BCB), via written request addressed to the Sub-management of Monetary Material Operations, up to 5,000 pieces in each of the different coin denominations and up to 50,000 banknotes of Bs10 and Bs20. b) Through the Financial Intermediation Entities of which they are clients, in coordination with the BCB.

Article 6. (Dissemination). The BCB will provide Financial Intermediation Entities with posters indicating the obligation to exchange and fragment Bolivianos, which must be placed in visible locations in all their branches and agencies.

CHAPTER III SUPERVISION AND PENALTIES

Article 7. (Coordination with ASFI). The BCB will coordinate with ASFI the supervision and control of compliance with this Regulation by Financial Intermediation Entities.

Article 8. (Application of suspensions for non-compliance). Once the communication from ASFI regarding non-compliance with this regulation is received, the BCB will proceed to suspend the infringing Financial Intermediation Entity according to the following detail:

1. For the first non-compliance, suspension for 15 calendar days to buy and sell USD to the BCB.
2. For the second non-compliance, suspension for 30 calendar days to buy and sell USD to the BCB and to conduct Open Market Operations (OMA) with the BCB.
3. From the third non-compliance onwards, suspension for 60 days to buy and sell USD to the BCB and to conduct Open Market Operations (OMA) with the BCB.