Central Bank of Bolivia

Board of Directors

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BOARD RESOLUTION NO. 106/2021

SUBJECT: TREASURY MANAGEMENT – MONETARY MATERIAL ADMINISTRATION REGULATION

VIEWED:

• 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 Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005, and its modifications.
• Board Resolution No. 093/2018 of July 24, 2018, and its modifications, which approves the Monetary Material Administration Regulation.
• Report BCB-GTES-SAMM-DAMM-INF-2021-78 of September 9, 2021, from the Treasury Management.
• Report BCB-GAL-SANO-DLBCI-INF-2021-188 of September 21, 2021, 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 outlines 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.

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• 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 normative 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 to the BCB's normative competence of all entities of the financial intermediation system and financial services, whose operation is authorized by the Superintendence of Banks and Financial Entities, currently the Financial System Supervision Authority (ASFI).
• That in subsections a), m), and o) of its Article 54, it states 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 what is established by 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 subsection 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 from each entity under its scope of competence the document(s), report(s), or others necessary, within the framework of its attributions.
• That the Statute of the BCB 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 norms that are necessary for the BCB to fulfill the functions, competencies, and powers that

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are assigned to it by Law; to define the BCB's policies, specialized norms 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 Report BCB-GTES-SAMM-DAMM-INF-2021-78 from the Treasury Management states that "In view that the last version of the Monetary Material Administration Regulation approved in 2018 currently has 4 modifications, in order to facilitate the understanding and correct application of said Regulation by the EIFs and the PBE, it is proposed to issue a new Monetary Material Administration Regulation, according to what is exposed in the present report."
• That Report BCB-GAL-SANO-DLBCI-INF-2021-188 from the Legal Affairs Management concludes that the proposal for a new Monetary Material Administration Regulation does not contravene the current legal framework, therefore it is legally procedent, being the competence of the BCB Board 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 Monetary Material Administration Regulation, in its VI chapters and 27 articles which form part of the present Resolution as an annex.

Article 2.- The Monetary Material Administration Regulation will enter into force from the approval of the present Resolution.

Article 3.- Repeal with effect from the date the Monetary Material Administration Regulation, approved by Board Resolution No. 093/2018 of July 24, 2018, and its modifications contained in Board Resolutions No. 133/2018 of September 18, 2018, No. 083/2019 of July 9, 2019, RD No. 043/2020 of March 24, 2020, and RD No. 068/2020 of July 28, 2020.

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

La Paz, September 30, 2021

Roger Edwin Rojas Ulo
Samuel Rafael Boyán Tellez
Bismarck Javier Arevilca Vásquez
Gabriel Herbas Camacho
Gumerindo Héctor Pino Guzmán

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MONETARY MATERIAL ADMINISTRATION REGULATION

CHAPTER I

PRELIMINARY PROVISIONS

Article 1. (Object of the Regulation)

This Regulation aims to regulate:

a) The deposit, processing, and withdrawal of monetary material, resulting from operations carried out by the Public Banking Entity and Financial Intermediation Entities, 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) Deposits of MM for credit to fiscal accounts under the administration of the BCB, attention to Payment Orders and Manager's Checks issued by the BCB, collection of funds in custody from the vaults of the Public Banking Entity, and sending of remittances in US dollars to the Federal Reserve of the United States of America.

Article 2. (Scope of Application)

This Regulation will be applied to the Public Banking Entity and to Financial Intermediation Entities 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 fiscal current accounts made by the public. It also applies to withdrawals of funds for the issuance of Payment Orders or Manager's Checks of the Central Bank of Bolivia.

Article 3. (Abbreviations and Definitions)

I. This Regulation will use the following abbreviations:

• BCB. Central Bank of Bolivia.
• PBE. Public Banking Entity.
• EIF. Financial Intermediation Entity.
• ETM. Monetary Material and/or Securities Transport Company.
• FED. Federal Reserve of the United States of America.

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• GTES. Treasury Management of the BCB.
• GGRAL. General Management.
• MM. Monetary Material.
• MN. National Currency.
• PFB. First Family of Banknotes of the Plurinational State of Bolivia.
• SOMM. Sub-management of Monetary Material Operations dependent on the GTES of the BCB.
• USD. US Dollars.

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

Unusable Store: Area of the GTES where banknotes that, as a result of processing carried out by the GTES, have been classified as unfit and subsequently unusable are stored.

Vault Environments: Closed and protected spaces of the BCB that have security measures for the safeguarding of MM or securities.

GTES Security Environments: Closed and protected spaces of the BCB that have security measures for the safeguarding, processing, destruction, or transit of MM.

Anomalies: Corresponds to surplus, missing, counterfeit, double series, altered or completed signatures, or half-pieces of banknotes, among others.

Unfit Banknote: It is a banknote issued by the BCB that clearly retains both its 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.

Fractional Cash: Area of the GTES where operations with the general public and EIFs are carried out, such as the receipt of deposits for fiscal accounts, exchange and fractionalization of MN, registration of checks and payment orders of EIFs, and others.

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Package Cash: Area of the GTES where the receipt of deposits and the delivery of MM for payment of checks or payment orders of EIFs is carried out.

Banknote Binding: Ordering of the banknotes of each bundle, so that all are in the same direction and orientation, that is, all banknotes must present the portrait(s) facing forward and their orientation must be the same.

Band: Paper piece that covers each bundle of banknotes, allowing its separation from other bundles.

Public Banking Entity: Banking entity with state shareholding greater than ninety-seven percent (97%), with exclusive competence to administer the fiscal accounts of the Public Administration at its different levels of government on behalf of the BCB, with a mandate to carry out operations and financial services, established in its organic law, oriented towards the modernization of State financial management and support for the development of national economic activity.

Banknote Bundle: Set of one hundred pieces of banknotes of the same denomination and of the same family, covered by a band.

Funds in Custody: Packages of banknotes deposited by EIFs in the branches or agencies of the PBE enabled for such effect.

Banknote Lot: Set of banknote packages, grouped by institution, that are processed and classified at the BCB.

Label: Tag that contains data and identifies the EIF that formed the package of banknotes or coin box, which is adhered to them.

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.

MM Processing: Counting, verification, and classification of MM by the BCB, or by the ETM or EIF that the Issuing Entity determines.

Auxiliary Treasury: Area of the GTES where MM is stored for supply to Fractional Cash.

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Banknote Unusable Process: Process by which unfit banknotes, after being recounted and verified, are perforated in the signatures and serial numbers, losing their monetary value.

CHAPTER II

MM DEPOSITS

Article 4. (Deposits)

I. EIFs may make MM deposits at the BCB in MN or USD in the schedules defined by the BCB through an express circular issued by the GGRAL.

II. Deposits of banknotes in MN will be made in packages containing one thousand pieces of banknotes of a single denomination of the same family (previous family of banknotes or PFB), ordered in ten bundles of one hundred pieces each. For bundles of unfit banknotes, binding must be performed.

III. In order to guarantee the circulation of new and good condition banknotes of Bs10 and Bs20, only unfit banknotes in these denominations may be deposited.

IV. Deposits of banknotes in USD will be carried out in accordance with what is established in the current external circular of GGRAL.

V. Deposits of coins in MN may be made, with prior written authorization from GTES, provided that they do not affect the availability in circulation of the respective denomination.

VI. Deposits of coins in USD are not permitted.

Article 5. (Identification of banknote deposits)

I. The labels of the packages of fit banknotes in MN will be white. Packages of unfit banknotes in MN must carry labels of brown color. 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, if applicable.
3. Denomination of the MM, amount of the package, and currency.

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4. Place and date of package formation.

II. The bands of the bundles of banknotes in MN contained in the packages must carry the logo of the depositing EIF.

III. The bands of the bundles of USD banknotes, contained in the packages deposited by EIFs, must comply with the requirements established by external circular of GGRAL.

Article 6. (Packaging of banknotes)

Banknote packages must be wrapped in shrink plastic that carries the logo of the depositing EIF. The use of any other tying and packaging material will not be accepted.

Article 7. (Classification of Banknotes)

I. Banknote packages for deposit in MN must be separated by the EIF by family of banknotes and these in turn classified into fit and unfit banknotes. Packages of unfit banknotes must be bound. Packages of banknotes in USD must be classified according to what is established in the current external circular of GGRAL.

II. To determine the quality of banknotes in circulation in MN, the GTES, with the approval of the GGRAL, will establish a Manual for the Selection of Boliviano Banknotes.

Article 8. (Packaging and identification of coin deposits)

Coins to be deposited must be packaged in paper cylinders containing fifty pieces of the same denomination; and fifty of these cylinders will form a box of two thousand five hundred pieces. Likewise, for their identification, each box must carry a label from the EIF with the same information requested for banknote packages, and each cylinder must have the denomination printed on it.

Article 9. (Reception)

Deposits will be received in the security environments of the GTES, where the following will be verified:

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1. The information contained in the labels adhered to the banknote packages and/or coin boxes, as well as in the bands, as established in Articles 5 and 8 of this Regulation.

2. The existence of 10 bundles of banknotes in each package separated by their respective bands, which must show the logo of the depositing EIF.

3. The correct packaging, as established in Articles 6 and 8 of this Regulation, which must not present tears or rips.

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 GGRAL 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 and the responsible personnel of the GTES. The MM will be transferred to the vault environments of the BCB for safeguarding.

Article 11. (Deposits at the PBE)

EIFs may make MM deposits in MN at the branches or agencies of the PBE enabled for such effect, complying with the requirements established in this chapter.

CHAPTER III

PROCESSING OF DEPOSITED MN MM

Article 12. (Scheduling of processing)

The BCB, through the SOMM, will schedule the processing of banknote packages classified as unfit and/or fit, and will communicate the date of this to the corresponding EIF, with an advance of at least three (3) business days for the designation of representatives (supervisors) who will witness and validate the process and its results.

Article 13. (Processing of unfit banknotes)

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I. Banknote packages classified as unfit will be processed in the security environments of the BCB, in the presence of supervisors from the EIF that made the deposit of the packages and, in case that they were formed by an ETM on behalf of this EIF, a supervisor from the ETM may also be present.

II. If, in the processing described in the previous paragraph, the equivalent of more than 1% of fit banknotes and/or unbound and/or misclassified between banknote families is found in the Banknote Lot recounted daily, the return of said lot will be carried out, which, having been processed by the BCB, must be deposited again at the Issuing Entity on the same day.

Article 14. (Delivery and registration of processed MM)

I. The responsible persons for the processing of MM will deliver in the vault environments of the BCB the classified MM in packages of fit banknotes and packages of unusable banknotes, separated by banknote family.

II. Packages of fit banknotes will remain safeguarded in vault environments.

III. Packages of unusable banknotes will be physically transferred to the unusable banknote store for safeguarding and subsequent destruction.

Article 15. (Differences in processing)

I. If anomalies are established in the processing of MM, charges and credits will be made in the current and reserve account or reserve account of the depositing EIF, as appropriate.

II. Charges and credits will be made within a maximum period of one (1) business day after the differences are established.

Article 16. (Processing of fit banknotes)

I. Banknote packages classified as fit will be processed in the security environments of the BCB, in the presence of supervisors from the EIF that made the deposit of the packages and, in case that they were formed by an ETM on behalf of this EIF, a supervisor from the ETM may also be present.

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II. If, in the processing described in the previous paragraph, the equivalent of more than 1% of unfit banknotes and/or misclassified between banknote families is found in the Banknote Lot recounted daily, the return of said lot will be carried out, which, having been processed by the BCB, must be deposited again at the Issuing Entity on the same day.

CHAPTER IV

WITHDRAWAL OF MM

Article 17. (Withdrawal of MM from the BCB)

I. EIFs may withdraw MM in MN and USD from the BCB charged to their current and reserve accounts or reserve accounts.

II. The delivery by the BCB of MN or USD will be carried out based on the availability by denomination of the MM.

III. The minimum quantity of MM to be withdrawn is a package of banknotes or a box of coins.

Article 18. (Withdrawal of MM from the PBE)

EIFs may make withdrawals of MM in MN from the PBE, at the branches or agencies of the PBE enabled for such effect, according to resource availability in this entity.

Article 19. (Priority of delivery of MM in MN at the BCB)

I. The MM to be delivered will be preferably the one deposited by the same EIF or by packages formed by the ETM contracted by the EIF. If these packages do not exist in the requested denomination, the GTES will deliver packages deposited by another EIF or own to the BCB.

II. The EIF that makes the withdrawal may request the recounting and verification of the MM in the presence of supervisors from the EIF or ETM that formed the package.

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

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CHAPTER V

COMMISSIONS

Article 20. (Commissions for deposits and/or withdrawals of MM in MN)

EIFs may carry out a single deposit or withdrawal operation of MM in MN from the BCB daily without cost. From the second operation, the BCB will charge a commission according to the BCB Commission Table for Services.

Article 21. (Commissions for deposits of MM in MN with inadequate classification)

EIFs that deposit MM in MN with inadequate classification will be subject to a commission as established in the BCB Commission Table for Services.

Article 22. (Commissions for deposits and/or withdrawals of MM in USD)

Deposits and/or withdrawals of MM in USD that EIFs make at the BCB will be subject to a commission as established in the BCB Commission Table for Services.

CHAPTER VI

OTHER OPERATIONS RELATED TO MM ADMINISTRATION

Article 23. (Deposits to fiscal accounts)

The BCB will receive deposits in MN and USD, for credit to fiscal accounts under its administration, in the schedules established in the External Circular of GGRAL.

Article 24. (Attention to Payment Orders and Manager's Checks)

I. Payment Orders and Manager's Checks issued by the BCB may be collected by beneficiaries in the schedules established in the GGRAL circular.

II. Manager's Checks issued by the BCB may be collected by beneficiaries at the Fractional Cash of the BCB.

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III. Payment Orders issued by the BCB, in favor of an EIF, may be collected by beneficiaries at the Fractional Cash and Package Cash of the BCB.

IV. Payment Orders issued by the BCB, in favor of other beneficiaries, may be collected at the Fractional Cash.

Article 25. (Collection of funds in custody)

The BCB may, at any time, withdraw from the PBE the MM of the funds in custody, according to what is established in the Contract signed with the PBE and the Guides that form an indivisible part of it.

Article 26. (Sending of remittances to the FED)

I. The GGRAL of the BCB will authorize in writing by email the sending of remittances to the FED, formed by packages of USD deposited by EIFs for credit to the accounts of the Issuing Entity.

II. Prior to its sending, the GTES, in the presence of the supervisors of the depositing EIFs, will verify that the remittance is formed according to the characteristics established in the current external circular of GGRAL.

Article 27. (Accounting regularization of differences in remittances)

The BCB will proceed to the accounting regularization of the differences detected by the FED in case of shortages, surpluses, and/or counterfeit banknotes in the remittances ---