Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 110/2018

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

VIEWING:

The Political Constitution of the State, promulgated 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. 062/2015 of April 28, 2015.
Report BCB-GTES-SAMM-DAMM-INF-2018-99 of August 15, 2018, from the Treasury Management.
Report BCB-GAL-SANO-DLBCI-INF-2018-259 of August 17, 2018, 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, 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 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 obligated to exchange deteriorated or mutilated banknotes, provided that these clearly retain their two signatures and a serial number.
That pursuant to article 30 of Law No. 1670, all Financial Intermediation Entities (FIE) and financial services, whose operation is authorized by the Superintendence of Banks and Financial Entities (currently the Financial System Supervision Authority, ASFI), are subject to the normative competence of the BCB.

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That the Treasury Management, through Report BCB-GTES-SAMM-DAMM-INF-2018-99 of August 15, 2017, recommends the creation of the new 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-DLBCI-INF-2018-259, concludes that the new Regulation for the Exchange and Fragmentation of Monetary Material, in the terms expressed in Report BCB-GTES-SAMM-DAMM-INF-2018-99, is legally appropriate, as it is supported by the current legal framework, and its approval is the competence of the Board of Directors of the Issuing Entity 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 BCB Statute.

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 three chapters and nine articles; which, as an annex, forms part of this Resolution.

Article 2.- This Regulation shall enter into force on September 10, 2018, rendering ineffective the Regulation for the Exchange and Fragmentation approved by B.R. No. 062/2015 from that date.

Article 3.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, August 21, 2018

Pablo Ramos Sánchez
Abraham Pérez Alandia
Gabriel Herbas Camacho

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Luis Baudoin Olea
Ronald Polo Rivero
Sergio Velarde Vera

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ANNEX

REGULATION FOR THE EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL

CHAPTER I

OBJECT AND SCOPE OF APPLICATION

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

Article 2. (Abbreviations).

FIE: Financial Intermediation Entity
ASFI: Financial System Supervision Authority
OMA: Open Market Operations

Article 3. (Scope of Application).
This Regulation applies to all FIEs holding Current and Reserve Accounts or Reserve Accounts, whose operation is authorized by the ASFI, established throughout the national territory.

CHAPTER II

EXCHANGE AND FRAGMENTATION OF MONETARY MATERIAL

Article 4. (Exchange).
FIEs are obligated to exchange deteriorated or mutilated Boliviano banknotes, provided that these clearly retain their two signatures and a serial number.

Article 5. (Fragmentation).
FIEs, in all their branches and agencies within the national territory, are obligated to fragment Boliviano banknotes into those of lower value or into Boliviano coins, and Boliviano coins into those of lower value.

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Article 6. (Categories and fragmentation limits). The following categories and limits are established for the fragmentation of monetary material:

No.	Categories	Fragmentation Limits
1.	General public, businesses, and small shops	The public will be served by fragmentation up to 1,000 banknotes and 1,000 coins of each denomination.
2.	Medium and large operators in the public or private sector (commercial chains, supermarkets, fuel supplier associations, pharmacy chains, toll service companies, and others)	a) Through the Central Bank of Bolivia (BCB), via written request addressed to the Sub-management of Monetary Material Operations: <br> i. Fragmentation will be delivered up to 50,000 banknotes of Bs100 or Bs50 or Bs20 or Bs10 or a combination of these denominations that does not exceed 50,000 banknotes. <br> ii. Fragmentation will be delivered up to 5,000 coins in each of the different denominations. <br> b) Through the FIEs of which they are clients, in coordination with the BCB.

Article 7. (Dissemination).
The BCB will provide FIEs 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 8. (Coordination with ASFI).
The BCB will coordinate with the ASFI regarding the supervision and control of compliance with this Regulation by FIEs.

Article 9. (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 offending FIE according to the following details:

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

Board Resolution No. 110/2018 Approving the New Regulation for the Exchange and Fragmentation of Monetary Material of the Central Bank of Bolivia