Board Resolution No. 068/2020

BOARD RESOLUTION NO. 068/2020
SUBJECT: TREASURY MANAGEMENT – AMENDMENTS TO THE CURRENCY MATERIAL ADMINISTRATION REGULATION

HAVING SEEN:
The Political Constitution of the State (CPE), promulgated on February 7, 2009.
Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB).
Law No. 393 of August 21, 2013 on Financial Services.
The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005 and its amendments.
Board Resolution (BR) No. 093/2018 dated July 24, 2018, which approves the Currency Material Administration Regulation.
BR No. 133/2018 of September 18, 2018, which modifies Article 27 of the Currency Material Administration Regulation.
BR No. 083/2019 of July 9, 2019, which includes a transitional provision authorizing the deposit of usable banknotes of smaller denominations until March 31, 2020.
BR No. 043/2020 of March 24, 2020, which extends the validity of the provision included via BR No. 083/2019 until September 30, 2020.
The Report BCB-GTES-SAMM-DAMM-INF-2020-67 of July 24, 2020 from the Treasury Management.
The Report BCB-GAL-SANO-DLBCI-INF-2020-065 of July 27, 2020 from the Legal Affairs Management.

CONSIDERING:

That Article 327 of the CPE establishes that the BCB 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 points out the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, namely: i) Determine and execute monetary policy; ii) Execute exchange rate policy; iii) Regulate the payment system; iv) Authorize the issuance of currency; and v) Administer international reserves.

That Law No. 1670 in Articles 1 and 3 states that the BCB is the sole monetary and exchange authority of the country with administrative, technical, and financial competence and specialized regulatory powers 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 30 establishes the functions of the BCB regarding the issuance of banknotes and metallic coins, as well as the submission of Financial Intermediation Entities (FIEs) to the BCB's regulatory competence.

That in letters a), o), and m) of its Article 54, it points out as attributions of the BCB Board to issue norms and adopt general decisions that are necessary for the Issuing Entity to fulfill the functions, competencies, and powers assigned to it by Law; to authorize and supervise the printing, issuance, and destruction of banknotes and the minting and withdrawal of coins, within the norms of 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 any additional administrative act.

That Law No. 393 on Financial Services in paragraph II of its Article 8 provides that the Financial System Supervision Authority – ASFI, is the institution responsible for exercising the functions of regulation, supervision, and control of financial entities.

That letter j) of its Article 23 establishes as an attribution of the ASFI to impose administrative sanctions on financial entities under its control, when they infringe legal and regulatory provisions.

That in paragraph I of its Article 29, it establishes that the ASFI will require each entity under its scope of competence to provide the documents, reports, or others necessary, within the framework of its attributions.

That the BCB Statute approved by Board Resolution No. 128/2005 and its modifications, in numerals 1), 2), 11), and 29) of its Article 11 establishes that the Board of the Issuing Entity has the attributions 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 Law; to define the BCB's policies, specialized regulations of general application, and internal norms; to approve the printing, issuance, and destruction of Boliviano banknotes and coins, and those issued for commemorative and numismatic purposes as well as their denominations, dimensions, designs, and colors, according to Regulations when applicable; as well as to approve and modify BCB Regulations, by two-thirds of all its members, without the need for any additional administrative act.

That the Report BCB-GTES-SAMM-DAMM-INF-2020-67 from the Treasury Management states that an analysis of the information on banknote storage in Financial Intermediation Entities (FIEs) was carried out, concluding that storage difficulties decreased significantly, both by department and by FIE. Nevertheless, it recommends extending the authorization for deposits of smaller denomination banknotes against the withdrawal of larger denomination packages, with prior scheduling and express authorization from GTES, until the first semester of 2021.

That the Report BCB-GAL-SANO-DLBCI-INF-2020-065 from the Legal Affairs Management concludes that the modification of the Currency Material Administration Regulation does not contravene the current legal order, therefore it is legally appropriate, being within the competence of the BCB Board to consider its approval by two-thirds of votes, in accordance with what is established in letter o) of Article 54 of Law No. 1670 and numeral 29) of Article 11 of its Statute.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Include in the Currency Material Administration Regulation, the abbreviations for Currency Material (MM), National Currency (MN), New Family of Banknotes (NFB), and Sub-Management of Currency Material Operations (SOMM), as well as other formatting adjustments included in the Consolidated Text attached to this Resolution.

Article 2.- Modify the Sole Transitional Provision of the Currency Material Administration Regulation, as follows:

SAYS:
Sole Transitional Provision.- Exceptionally, FIEs may deposit usable 10 and 20 Boliviano banknotes from April 1, 2020, until September 30, 2020, only in BCB vaults in the city of La Paz. To deposit these banknotes, the FIE must withdraw from the BCB by the next business day at the latest, an equivalent amount in usable 50 and 100 Boliviano banknotes, with prior scheduling and express authorization from the BCB Treasury area, for which the application of paragraph II of Article 4 of this Regulation is exempted.”

SHOULD SAY:
“Sole Transitional Provision.- Exceptionally, FIEs may deposit packages of usable banknotes of Bs10 and Bs20 from the previous family of banknotes, from April 1, 2020, to June 30, 2021, only in BCB vaults in the city of La Paz, with prior scheduling and express authorization from the BCB Treasury area, for which the application of paragraph II of Article 4 of this Regulation is exempted. To deposit these banknotes, the FIE must withdraw from the BCB in the city of La Paz by the next business day at the latest, an equivalent amount in usable banknotes of Bs50 and Bs100.”

Article 3.- The modifications to the Currency Material Administration Regulation will enter into force from August 1, 2020.

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

La Paz, July 28, 2020
Armando Pinell Siles
Walter Morales Carrasco
Alejandro Banegas Rivero
José Gabriel Espinoza Yañez

ANNEX
CONSOLIDATED TEXT OF THE CURRENCY MATERIAL ADMINISTRATION REGULATION

CHAPTER I
PRELIMINARY PROVISIONS

Article 1. (Object of the Regulation). This Regulation aims to regulate:
a) The deposit, administration, and withdrawal of currency material, arising from operations carried out by Financial Intermediation Entities (FIEs) holders of Current and Reserve Accounts or Reserve Accounts, within the framework of what is established in Title II, Chapter VI of Law No. 1670. b) 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 for the issuance of payment orders or checks from Management, according to what is established in Chapter VII of this Regulation.

Article 2. (Scope of Application). This Regulation will be applied to FIEs holders of Current and Reserve Accounts or Reserve Accounts, that 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 current fiscal accounts made by the public. It also applies to fund withdrawals for the issuance of payment orders or management checks from the Central Bank of Bolivia (BCB).

Article 3. (Abbreviations and Definitions).
I. This Regulation will use the following abbreviations:
a) BCB. Central Bank of Bolivia. b) EBP. Public Financial Intermediation Entity. c) FIE. Financial Intermediation Entity. d) GTES. BCB Treasury Management e) MM. Currency Material. f) MN. National Currency g) NFB. New Family of Banknotes. h) SOMM. Sub-Management of Currency Material Operations
II. For the purposes of this Regulation, the following definitions will be used.

Unusable Banknote. It is a banknote issued by the BCB that clearly retains its two signatures and at least one serial number, and that according to the criteria established in the “Manual for the Selection of Boliviano Banknotes”, must be withdrawn from circulation. Banknote Box. Set of 50,000 pieces of banknotes of the same denomination. Coin Box. Set of 2,500 pieces of coins of the same denomination, ordered in 50 cylinders of 50 coins each. Band. Paper piece that covers each bundle of banknotes, allowing its separation from other bundles. Bundle of banknotes. Set of one hundred pieces of banknotes of the same denomination and of the same family, covered by a band. Batch of banknotes. Set of banknote packages, grouped by institution, that are processed and classified at the BCB. Label. Tag that contains data allowing the identification of the FIE that formed the banknote package or coin box and that is attached to it. Banknote Package. Set of one thousand pieces of banknotes of the same denomination and of the same family, ordered in ten bundles of one hundred pieces each. Site. The physical place, enabled in the Treasury System, in which the MM is stored and through which the MM transits. Inutilization. Process by which unusable banknotes are perforated, after being recounted and verified, losing their monetary value. Direct Inutilization. Process by which unusable banknotes are perforated without passing through the stages described in Articles 13 and 14 of this regulation.

CHAPTER II
DEPOSITS OF CURRENCY MATERIAL

Article 4.- (Deposits)
I. FIEs may make cash deposits at the BCB in MN or United States dollars in the schedules defined by the BCB through an express circular issued by its General Management.
II. Banknote deposits will be made in packages containing one thousand pieces of banknotes of a single denomination of the same family (previous family of banknotes or New Family of Banknotes, NFB), ordered in ten bundles of one hundred pieces each. The bundles of unusable banknotes must contain banknotes facing the same way; that is, all banknotes in the bundle must be in the same position and orientation. With the purpose of guaranteeing the circulation of new and good condition banknotes of Bs10 and Bs20, only unusable banknotes in these denominations may be deposited.
III. Deposits of coins in MN require prior authorization from GTES, provided that they do not affect the availability in circulation of the respective denomination.

Article 5. (Classification).
I. Banknote packages for deposit in MN must be separated by the FIE by family of banknotes and these in turn classified into usable and unusable banknotes. Banknote packages in US dollars will be classified by denomination.
II. To determine the degradation of banknotes in circulation, GTES, with the approval of the General Management, will establish a Manual for the Selection of Boliviano Banknotes.

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

1. Name and logo of the depositing FIE.
2. Name or seal of the Company that formed the package, if applicable.
3. Denomination of the MM and amount of the package.
4. Place and date of the formation of the package.
   II. The bands of the bundles of banknotes in MN contained in the packages must carry the logo of the depositing FIE.
   III. The bands of the bundles of US dollar banknotes, contained in the packages deposited by FIEs must have the characteristics established by the Federal Reserve of the United States of America, which will be communicated through an external circular from General Management.

Article 7. (Packaging of banknotes). Banknote packages must be packaged with shrink wrap that carries the logo of the depositing FIE. 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 cylinders containing fifty pieces of the same denomination; fifty of these cylinders packaged in shrink wrap will form a box of two thousand five hundred pieces. Likewise, for their identification, they must carry labels from the FIE with the same information requested for banknote packages.

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

1. The information contained in the labels attached to the banknote packages and/or coin boxes.
2. The existence of 10 bundles of banknotes in each package separated by their respective bands, which must show the logo of the depositing FIE.
3. The correct packaging in shrink wrap.
4. In the case of coin deposits, the existence of 50 cylinders of the same denomination in each box.
5. 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 of the MM 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). FIEs may make MM deposits in MN at the EBP.

CHAPTER III
COUNTING OF DEPOSITED CURRENCY MATERIAL

Article 12. (Counting scheduling). The BCB, through GTES, will schedule the counting of banknote packages in MN classified as unusable and/or usable, and will communicate the counting date to the corresponding FIE, at least 3 business days in advance for the designation of representatives (observers) to witness and validate the process and its results.

Article 13. (Counting of unusable banknotes).
I. Banknote packages in MN classified as unusable will be recounted and verified by the BCB, or by the transport company it determines, in BCB environments and in the presence of observers from the FIE that made the deposit of the packages.
II. If in the counting process the equivalent to more than 1% of usable and/or non-facing banknotes is found in the daily batch recounted, said batch will be returned, which, having been processed by the BCB, must be deposited again at the BCB on the same day.

Article 14. (Delivery and registration of recounted currency material).
I. The counting managers will deliver in the central vault of the BCB the MM classified in usable banknote packages and unusable banknote packages, separated by family of banknotes.
II. The unusable banknote packages will be physically transferred to the unusable banknote warehouse for subsequent destruction. The usable banknote packages will remain in the vault.

Article 15. (Differences in counting). If surpluses, shortages, or counterfeit banknotes are established in the MM counting process, charges and credits will be made in the current and reserve account or reserve account of the corresponding FIE, within a maximum period of one (1) business day after the differences are established.

Article 16. (Counting of usable banknotes).
I. Banknote packages in MN classified as usable may be recounted and verified by the BCB, or by the transport company or FIE it determines, in BCB environments and in the presence of observers from the FIE that made the deposit of the packages.
II. If in the counting process the equivalent to more than 1% of unusable banknotes is found in the daily batch recounted, said batch will be returned, which, having been processed by the BCB, must be deposited again at the BCB on the same day.

CHAPTER IV
WITHDRAWAL OF CURRENCY MATERIAL

Article 17. (Withdrawal of cash by FIEs).
FIEs may withdraw cash in MN and United States dollars charged to their current and reserve accounts or reserve accounts.
The delivery by the BCB of MN or United States dollars will be carried out based on availability by MM denominations.
In the case of MN, the BCB may carry out the delivery of MM in localities in the interior of the country, according to the request of the FIE and availability of resources in the EBP.
The quantities to be withdrawn in banknotes will correspond to a package as a minimum, and in the case of coins to a box.

Article 18. (Delivery Priority)
The MM to be delivered will be preferably the one deposited by the same FIE or by packages formed by the transport company contracted by the FIE. If these packages do not exist in the requested denomination, GTES will deliver packages deposited by another FIE or from the BCB itself. The FIE that makes the withdrawal may request the counting and verification of the MM in the presence of observers from the FIE or transport company that formed the package. The BCB has no responsibility for the presence of observers from other entities.

Article 19. (Withdrawal at the EBP).
FIEs may make MM withdrawals in MN from the EBP, according to what is established in the Contract and the corresponding Guides.

Article 20. (Collection of funds in custody).
The BCB may, at any time, withdraw from the EBP the MM corresponding to the funds in custody according to what is established in the Contract for the Provision of Operations and Financial Services to the BCB and in the respective Guides.

Article 21. (Sending of remittances abroad).
I. The General Management of the BCB will authorize in writing the sending of remittances abroad, composed of packages of US dollars deposited by FIEs for credit to the Issuing Entity's accounts.
II. Prior to sending the remittance abroad, GTES, in the presence of the observer from the depositing FIE, will verify that the logo of the depositing FIE is present on all bands of each bundle of the banknote package and that the label corresponds to the same Entity.

Article 22. (Differences in verification of remittances abroad). The BCB will proceed to the accounting regularization of differences for shortages, surpluses, and counterfeit banknotes in remittances abroad, which are 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 FIE 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 GTES.

CHAPTER V
COMMISSIONS

Article 23. (Commissions for movement in national currency). FIEs may make a daily movement in cash in MN with the BCB free of charge. From the second cash movement, the BCB will charge a commission according to the BCB Commission Table for Services.

Article 24. (Commissions for movement in foreign currency). Movements in cash with foreign currency that FIEs make with the BCB will be subject to a commission as established in the BCB Commission Table for Services.

Article 25.- (Commissions for cash deposits of the financial system in national currency with inadequate classification of currency material). FIEs that deposit cash in MN with inadequate classification will be subject to a commission as established in the BCB Commission Table for Services.

CHAPTER VI
REGISTRATION AND CONTROL OF CURRENCY MATERIAL

Article 26. (Registration). The registration of MM at BCB Treasury will be carried out 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 carried out at the level of packages of one thousand pieces for banknotes, and at the level of boxes for coins. Fractionated MM will be registered and controlled through fractional boxes.
Auxiliary Treasury may have units smaller than a package of banknotes or a box of coins, in case that the Sub-Management of Analysis and Planning of Currency Material of GTES has requested non-monetized banknote pieces or coins for its analysis, training, or preparation of advertising and dissemination material, according to a specific procedure of GTES.

CHAPTER VII
OTHER OPERATIONS WITH CURRENCY MATERIAL

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

Article 29. (Attention of 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 General Management Circular.

CHAPTER VIII
TRANSITIONAL PROVISIONS

Sole Transitional Provision.- Exceptionally, FIEs may deposit packages of usable banknotes of Bs10 and Bs20 from the previous family of banknotes, from April 1, 2020, to June 30, 2021, only in BCB vaults in the city of La Paz, with prior scheduling and express authorization from the BCB Treasury area, for which the application of paragraph II of Article 4 of this Regulation is exempted.