BOARD OF DIRECTORS

BOARD RESOLUTION NO. 067/2023

SUBJECT: TREASURY MANAGEMENT (GTES) – APPROVING THE REGULATION ON EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL OF THE CENTRAL BANK OF BOLIVIA.

VIEWED:

• The Political Constitution of the State (CPE) of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB) and its modifications.
• Board Resolution No. 095/2022, of October 6, 2022, which approves the Statute of the Central Bank of Bolivia (BCB).
• Board Resolution No. 102/2021 of September 16, 2021.
• Report BCB-GTES-SAMM-DAMM-INF-2023-63 of April 27, 2023, issued by the Treasury Management (GTES).
• Report BCB-GAL-SANO-DLBCI-INF-2023-142 of April 28, 2023, issued by the Legal Affairs Management (GAL).

CONSIDERING:

That Article 327 of the CPE establishes that the Central Bank of Bolivia is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That Article 328 of the CPE contemplates among the attributions of the BCB, the determination and execution of monetary policy.

That in accordance with 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 able to formulate policies of general application in monetary, exchange, and payments system matters.

That Article 44 of Law No. 1670 provides that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized norms of general application, and internal rules; as well as establishing administrative, operational, and financial strategies of the Issuing Entity, approving their respective short and medium-term programs.

That subsections a) and o) of Article 54 of Law No. 1670 establish that the BCB Board of Directors has the authority to issue norms and adopt general decisions that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by the Law, as well as to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for any additional administrative act.

That items 1) and 30) of Article 10 of the BCB Statute provide that the Board of Directors has the authority to approve general decisions and issue the norms that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by the Law, and to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for an additional administrative act.

That Article 26 of the Statute of the Issuing Entity stipulates that the Board of Directors rules on matters within its competence through resolutions. Likewise, every draft Board resolution must be motivated and justified by a technical report from the Management or Managements to whom the subject matter of the resolution corresponds, and by a report from the Legal Affairs Management. These reports must be submitted to the Board of Directors by the General Management with its recommendation.

That Board Resolution No. 102/2021 of September 16, 2021, approves the Regulation on Exchange and Fragmentation of Monetary Material of the BCB.

That the Treasury Management, through Report BCB-GTES-SAMM-DAMM-INF-2023-63, concludes that the proposal for the new Regulation on Exchange and Fragmentation of Monetary Material of the BCB is viable and will help to satisfy the population's demand for the exchange and fragmentation of Bolivian banknotes and coins, as well as to improve the operational and control of cash by Financial Intermediation Entities (EIFs), therefore recommending its approval to the Board of Directors.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2023-142, concludes that in accordance with Report BCB-GTES-SAMM-DAMM-INF-2023-63, the proposal for the new Regulation on Exchange and Fragmentation of Monetary Material of the BCB does not contravene any regulatory provision; therefore, it is legally appropriate, recommending the BCB Board of Directors its approval by two-thirds of the votes.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the new Regulation on Exchange and Fragmentation of Monetary Material of the BCB, in its Three (III) Chapters and Nine (9) Articles, which forms part of this Resolution as an Annex.

Article 2.- The Regulation will enter into force from the publication of this Board Resolution.

Article 3.- Repeal the Regulation on Exchange and Fragmentation of Monetary Material of the BCB, approved by Board Resolution No. 102/2021 of September 16, 2021.

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

La Paz, May 2, 2023

SIGNED. ROGER EDWIN ROJAS ULO, Oscar Ferrufino Morro, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.

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//4. B.D. No. 067/2023

ANNEX

REGULATION ON EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL OF THE CENTRAL BANK OF BOLIVIA

CHAPTER I

OBJECT AND SCOPE OF APPLICATION

Article 1. (Object).

This Regulation aims to regulate the exchange and fragmentation operations of Bolivian banknotes and/or coins that must be carried out by all Financial Intermediation Entities supervised by the Financial System Supervision Authority.

Article 2. (Abbreviations).

• ASFI: Financial System Supervision Authority
• BCB: Central Bank of Bolivia
• EIF: Financial Intermediation Entity
• MM: Monetary Material
• OMA: Open Market Operations

Article 3. (Scope of Application).

This Regulation applies to all EIFs supervised by the ASFI, established throughout the national territory.

CHAPTER II

EXCHANGE AND FRAGMENTATION OF MM

Article 4. (Exchange).

I. The BCB and the EIFs are obligated to exchange deteriorated or mutilated Bolivian banknotes, in accordance with the criteria established in the "Manual for the Selection of Bolivian Banknotes", provided that they clearly retain their two signatures and a serial number, regardless of whether the banknotes are torn in the part of the signatures or serial numbers, as long as these elements are complete and form part of the same banknote.

II. The BCB and the EIFs are obligated to exchange Bolivian coins of any denomination, without limits, for the equivalent amount in higher-value coins or Bolivian banknotes.

Article 5. (Fragmentation).

The BCB and the EIFs in all their branches and agencies within the national territory are obligated to fragment Bolivian banknotes and coins into smaller denominations.

Article 6. (Categories and fragmentation limits).

The following categories and limits for the fragmentation of MM are established:

No.	Categories	Fragmentation Limits
1.	General public, transport, businesses, and small shops	a) The public will be served with fragmentation up to 100 pieces of banknotes per denomination.<br>b) The public will be served with fragmentation up to 1,700 pieces per denomination of Bs5, Bs2, Bs1, and 50 cents, and up to 1,000 pieces per denomination of 20 cents and 10 cents.
2.	Medium and large operators in the public or private sector (commercial chains, supermarkets, fuel supplier associations, pharmacy chains, toll service companies, and others)	Through the BCB:<br>By written request addressed to the Sub-Management of Monetary Material Operations or to the email address fraccionamiento@bcb.gob.bo, including the breakdown of required denominations between banknotes and coins, provided that the total fragmented amount is less than Bs70,000.<br><br>Through EIFs:<br>In coordination with them, without limits on MM fragmentation.

Article 7. (Dissemination).

The BCB will provide EIFs with dissemination materials informing about the mandatory nature of the exchange and fragmentation of national currency, which must be displayed in visible places in all their branches and agencies.

CHAPTER III

SUPERVISION AND PENALTIES

Article 8. (Supervision by ASFI).

ASFI will incorporate in its Operational Risk Inspections the supervision of the adequate provision of national currency exchange and fragmentation services by EIFs and will inform the BCB of identified non-compliances, detailing: the infringing EIF, place, date, and time of the incident.

Article 9. (Application of suspensions for non-compliance)

Once the communication from ASFI regarding the non-compliance with this Regulation is received, the BCB will proceed to suspend the infringing EIF according to the following details:

1. For the first non-compliance in the year, a 15-calendar-day suspension to buy and sell USD to the BCB.
2. For the second non-compliance in the year, a 30-calendar-day suspension to buy and sell USD to the BCB and to carry out OMA with the BCB.
3. From the third non-compliance in the year, a 60-calendar-day suspension to buy and sell USD to the BCB and to carry out OMA with the BCB.