Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 093/2018

SUBJECT: TREASURY MANAGEMENT – NEW REGULATION ON THE ADMINISTRATION OF CURRENCY MATERIAL.

VIEWING:

• Law No. 1670, of October 31, 1995, of the Central Bank of Bolivia (BCB).
• The Statute of the Central Bank of Bolivia approved by Board Resolution No. 128/2005, of October 21, 2005, and its amendments.
• The Regulation on the Administration of Currency Material, approved by Board Resolution No. 20/2016, of February 2, 2016, and its amendments.
• The Report from the Treasury Management BCB-GTES-SAMM-DAMM-INF-2018-90, of July 20, 2018.
• The Report from the Legal Affairs Management BCB-GAL-SÁNO-DLBCI-INF-2016-224, of July 23, 2018.

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, include: determining and executing monetary policy, executing exchange rate policy, regulating the payment system, authorizing the issuance of currency, and administering international reserves.
• That pursuant to 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 currency 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 Superintendency of Banks and Financial Entities (currently the Financial System Supervision Authority - ASFI), are subject to the normative competence of the BCB, with respect to their relationship as the monetary, exchange, and payment system authority.
• That article 67 of the Statute of the Central Bank of Bolivia establishes that the Treasury Management is responsible for establishing the requirements for the acquisition, distribution, destruction, and administration of currency material.
• That the Treasury Management through Report BCB-GTES-SAMM-DAMM-INF-2018-90 concludes and recommends: “In view of the issuance of the First Family of Banknotes of the Plurinational State of Bolivia, the new Commission Table for Services of the BCB approved for the 2018 management, and some clarifications within the framework of the operational handling of currency material at the BCB, the GTES recommends approving the New Regulation on the Administration of Currency Material (...)”.
• That the Legal Affairs Management through Report BCB-GAL-SANO-DLBCI-INF-2018-224 concludes that: “the approval of a new ‘Regulation on the Administration of Currency Material’ that incorporates the modifications proposed by the GTES and the GAL, does not contravene the legal framework, being legally appropriate and corresponding to the Board of the BCB to consider its approval by two-thirds of the votes of all its members, in accordance with what is established in subsection o) of article 54 of Law No. 1670 and numeral 29 of article 11 of the Statute of the Issuing Entity.”.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the new Regulation on the Administration of Currency Material, in its VII chapters and 29 articles which form part of the annex of this Resolution.

Article 2.- This Regulation shall enter into force as of August 8, 2018.

Article 3.- Repeal as of August 8, 2018, the Regulation on the Administration of Currency Material, approved by Board Resolution No. 20/2016, of February 2, 2016, and its amendments contained in Board Resolutions No. 44/2017, of April 4, 2017; No. 150/2017, of October 24, 2017; No. 166/2017, of November 21, 2017; No. 19/2018, of January 30, 2018; and No. 20/2018, of January 30, 2018.

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

La Paz, July 24, 2018

Pablo Ramos Sánchez Abraham Pérez Alandia Gabriel Herbas Camacho Luis Baudoin Olea Ronald Polo Rivero Sergio Velarde Vera

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ANNEX

REGULATION ON THE ADMINISTRATION OF CURRENCY MATERIAL

CHAPTER I

PRELIMINARY PROVISIONS

Article 1. (Objective 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 (EIF) 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 processing of fund withdrawals for 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 EIF 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 of 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) EIF. Financial Intermediation Entity. d) GTES. Treasury Management of the BCB. e) SOMM. Sub-Management of Currency Material Operations dependent on the Treasury Management of the BCB.

II. For the purposes of this Regulation, the following definitions will be used:

a) Unfit banknote. Is that banknote issued by the BCB that clearly retains its two signatures and at least one serial number, and that according to the criteria of 1) Dirt, stains, graffiti, and discoloration and 2) Tears, mutilations, holes, and repairs, established in the “Manual for the Selection of Bolivian Banknotes”, must be withdrawn from circulation.

b) Banknote box. Set of 50,000 pieces of banknotes of the same denomination.

c) Coin box. Set of 2,500 pieces of coins of the same denomination, arranged in 50 cylinders of 50 coins each.

d) Strap. Paper piece that covers each bundle of banknotes, allowing its separation from other bundles.

e) Bundle of banknotes. Set of one hundred pieces of banknotes of the same denomination and of the same family, covered by a strap.

f) Batch of banknotes. Set of packages of banknotes, grouped by institution, that are processed and classified at the BCB.

g) Label. Tag that contains data allowing the identification of the EIF that formed the package of banknotes or coin box and that is attached to it.

h) Package of banknotes. Set of one thousand pieces of banknotes of the same denomination and of the same family, arranged in ten bundles of one hundred pieces each.

i) Site. The physical place, enabled in the Treasury System, in which currency material is stored and through which it transits.

j) Inutilization. Process by which unfit banknotes are perforated, after being recounted and verified, losing their monetary value.

k) Direct Inutilization. Process by which unfit 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. EIF may make cash deposits at 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.

II. Banknote deposits shall be made in packages containing one thousand pieces of banknotes of a single denomination of the same family, arranged in ten bundles of one hundred pieces each. Bundles of unfit banknotes must contain banknotes facing the same way; that is, all banknotes in the bundle must be in the same position and orientation. 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.

III. 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).

I. Banknote packages for deposit in national currency must be separated by the EIF by banknote family, and these in turn classified into fit and unfit banknotes. Banknote packages in US dollars shall be classified by denomination.

II. To determine the degradation of banknotes in circulation, the GTES with the approval of the General Management, will establish a Manual for the Selection of Bolivian Banknotes.

Article 6. (Identification of deposits).

I. The labels of fit banknote packages shall be white. Unfit banknote packages must carry brown labels. In both cases, the following information must be recorded:

1. Name and logo of the depositing EIF.
2. Name or seal of the Company that formed the package on behalf of the depositor, if applicable.
3. Denomination of the currency material and amount of the package.
4. Place and date of the formation of the package.

II. The straps of the bundles of national currency banknotes contained in the packages must bear the logo of the depositing EIF.

III. The straps of the bundles of US dollar banknotes, contained in the packages deposited by the EIF must have the characteristics established by the Federal Reserve of the United States of America, which will be communicated through an external circular of the General Management.

Article 7. (Packaging of banknotes). Banknote packages must be wrapped in shrink wrap that bears the logo of the depositing EIF. 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 identification, they must carry labels from the EIF with the same information requested for banknote packages.

Article 9. (Receipt). Deposits will be received in the security areas of the 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 straps, which must show the logo of the depositing EIF.
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, which may be defined by the General Management of the BCB through an express circular.

Article 10. (Registration and Custody). Once the receipt requirements for currency 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 at the EBP). EIF may make deposits of currency material in national currency at the EBP.

CHAPTER III

COUNTING OF DEPOSITED CURRENCY MATERIAL

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

Article 13. (Counting of unfit banknotes).

I. Banknote packages in national currency classified as unfit, will be recounted and verified by the BCB, or by the company it determines, in BCB environments and in the presence of observers from the EIF that made the deposit of the packages.

II. If during the counting process the equivalent to more than 1% of fit and/or non-facing banknotes is found in the daily recounted batch, 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 currency material classified in fit banknote packages and unfit banknote packages, separated by banknote family.

II. Unfit banknote packages will be physically transferred to the unfit banknote warehouse for subsequent destruction. Fit banknote packages will remain in the vault.

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

Article 16. (Counting of fit banknotes).

I. Banknote packages in national currency classified as fit, may be recounted and verified by the BCB, or by the company or EIF it determines, in BCB environments and in the presence of observers from the EIF that made the deposit of the packages.

II. If during the counting process the equivalent to more than 1% of unfit banknotes is found in the daily recounted batch, 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 EIF).

I. EIF may withdraw cash in national currency and United States dollars charged to their current and reserve accounts or reserve accounts.

II. The delivery by the BCB of national currency or United States dollars will be carried out based on the availability by denomination of the currency material.

III. In the case of national currency, the BCB may carry out the delivery of currency material in localities in the interior of the country, according to the request of the EIF and availability of resources at the EBP.

IV. 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).

I. The currency material to be delivered will preferably be that deposited by the same EIF or by packages formed by the Company contracted by the EIF. If these packages do not exist in the requested denomination, the GTES will deliver packages deposited by another EIF or belonging to the BCB.

II. The EIF that makes the withdrawal may request the counting and verification of the currency material in the presence of observers from the EIF or Company that formed the package.

III. The BCB has no responsibility for the presence of observers from other entities.

Article 19. (Withdrawal at the EBP). EIF may make withdrawals of currency material in national currency 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 currency material corresponding to the 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 21. (Sending remittances abroad).

I. The General Management of the BCB will authorize in writing the sending of remittances abroad, formed by packages of US dollars deposited by the EIF for credit to the accounts of the Issuing Entity.

II. Prior to the sending of the remittance abroad, the GTES in the presence of the observer of the depositing EIF, will verify that the logo of the depositing EIF is present on all the straps of each of the bundles 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 EIF identified on the strap 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

COMMISSIONS

Article 23. (Commissions for movements in national currency). EIF may make daily movements in cash in national currency 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 movements in foreign currency). Cash movements in foreign currency that EIF 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). EIF that deposit cash in national currency 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 currency material at the 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 currency material will be registered and controlled through fractional boxes.

CHAPTER VII

OTHER OPERATIONS WITH CURRENCY 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 the External Circular of the General Management.

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