Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 150/2017

SUBJECT: TREASURY MANAGEMENT – MODIFIES THE REGULATION ON THE ADMINISTRATION OF MONETARY MATERIAL.

VIEWED:

• The Political Constitution of the State of February 7, 2009.
• 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 modifications.
• The Regulation on the Administration of Monetary Material, approved by Board Resolution No. 044/2017 of April 4, 2017.
• The Report from the Treasury Management BCB-GTES-SAMM-DAMM-INF-2017-107 of October 20, 2017.
• The Report from the Legal Affairs Management BCB-GAL-SANO-DLBCI-INF-2017-310 of October 20, 2017.

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 of Directors as the Highest Authority of the BCB, to authorize and supervise the printing, issuance, and destruction of monetary material, being empowered to issue, modify, and interpret norms and adopt general decisions necessary for their compliance, without the need for any additional administrative act.

That pursuant to article 30 of Law No. 1670, all financial intermediation and financial service entities, whose operation is authorized by the Superintendency of Banks and Financial Entities, are subject to the normative competence of the BCB, with respect to their relationship as monetary, exchange, and payment system authority.

That Article 38 subsection f) of the aforementioned Law of the Central Bank of Bolivia establishes that, in addition to what is provided in previous articles, the BCB may carry out other new operations that are compatible with the object of the BCB.

That article 67 of the Statute of the Central Bank of Bolivia establishes that the Treasury Management is responsible for establishing requirements for the acquisition, distribution, destruction, and administration of monetary material and for carrying out the custody of securities.

That the Treasury Management through Report BCB-GTES-SAMM-DAMM-INF-2017-107 recommends the modification of the Regulation on the Administration of Monetary Material in order to comply with Board of Directors instructions referred to the process of counting, classification, and manual destruction of monetary material, and to recommendations from Internal Audit Management.

That the Legal Affairs Management through Report BCB-GAL-SANO-DLBCI-INF-2017-310 concludes that the modifications proposed by GTES do not contravene current legal regulations and their drafting is based on criteria of updating and better control for the selection of Boliviano banknotes deposited in the BCB by Financial Intermediation Entities, and are therefore legally appropriate; it being the competence of the Board of Directors of the Issuing Entity to consider their approval 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.- Modify: the definition of unfit banknote and banknote bundle in article 3 (Terms and Definitions), article 4 (Deposits), article 5 (Classification), article 14 (Counting of Unfit Banknotes), article 17 (Counting of Eligible Banknotes), with the following text:

Article 3. (Terms and Definitions).

SAYS:

Unfit Banknote. Mutilated, torn, banknote with impressions or writings foreign to its original condition, or that falls within the category of banknotes not suitable for circulation, according to the range of the degree of deterioration of "Boliviano" banknotes in categories 4, 5, and 6, provided it clearly retains its two signatures and a serial number.

Banknote Bundle. Set of packages of banknotes that are processed and classified in reading-sorting equipment, grouped by institution and teller.

MUST SAY:

"Unfit Banknote. It is that banknote issued by the Central Bank of Bolivia 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 Boliviano Banknotes", must be withdrawn from circulation.

Banknote Bundle. Set of packages of banknotes, grouped by institution, that are processed and classified in the BCB".

Article 4. (Deposits).

SAYS:

Financial Intermediation Entities may make cash deposits in the BCB in national currency or United States dollars at the times defined by the BCB through an express circular issued by its General Management.

Banknote deposits will be made in packages containing one thousand pieces of banknotes of a single denomination, ordered in ten bundles of one hundred pieces each. In order to guarantee the circulation of new and good condition 10 and 20 Bolivianos banknotes, only unfit banknotes in these denominations may be deposited.

Coin deposits in national currency require prior authorization from GTES, provided they do not affect the availability in circulation of the respective denomination.

MUST SAY:

"Financial Intermediation Entities may make cash deposits in the BCB in national currency or United States dollars at the times defined by the BCB through an express circular issued by its General Management.

Banknote deposits will be made in packages containing one thousand pieces of banknotes of a single denomination, ordered in ten bundles of one hundred pieces each. Each bundle of banknotes must contain banknotes facing the same way; that is, all banknotes in the bundle in the same position and orientation. In order to guarantee the circulation of new and good condition 10 and 20 Bolivianos banknotes, only unfit banknotes in these denominations may be deposited.

Coin deposits in national currency require prior authorization from GTES, provided they do not affect the availability in circulation of the respective denomination."

Article 5. (Classification).

SAYS:

Packages of banknotes for deposit in national currency must be classified by the Financial Intermediation Entity into eligible and unfit. Packages of banknotes in US dollars will not be classified.

To determine the degradation of banknotes in circulation, GTES, with the approval of the General Management, will establish a range of six categories that contemplates different states of deterioration. Categories 4, 5, and 6 will be considered unfit for circulation.

Likewise, metallic coins that are perforated, filed, or altered will lose their quality of legal tender and will be demonetized and disqualified.

MUST SAY:

"Packages of banknotes for deposit in national currency must be classified by the Financial Intermediation Entity into eligible and unfit. Packages of banknotes in US dollars will not be classified.

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.

Likewise, metallic coins that are perforated, filed, or altered will lose their quality of legal tender and will be demonetized and disqualified."

Article 14. (Counting of Unfit Banknotes).

SAYS:

Packages of banknotes in national currency classified as unfit will be recounted and verified by the BCB, or by the company it determines, in BCB premises and in the presence of auditors from the Financial Intermediation Entity that made the deposit of the packages.

MUST SAY:

"Packages of banknotes in national currency classified as unfit will be recounted and verified by the BCB or by the company it determines, in BCB premises and in the presence of auditors from the Financial Intermediation Entity that made the deposit of the packages.

If, during the counting process, the equivalent of more than 10% of eligible banknotes and/or non-facing banknotes is found in the daily recounted bundle, the return of said bundle will be processed, which, having been processed by the BCB, must be deposited again in the BCB on the same day."

Article 17. (Counting of Eligible Banknotes).

SAYS:

The BCB may determine the verification and counting of packages of banknotes classified as eligible deposited by Financial Intermediation Entities applying the same procedures established in article 14 of this Regulation for the counting of packages of unfit banknotes.

If, during the counting process, the equivalent of more than 10% of unfit banknotes is found in each package or bundle of banknotes, the return of all the monetary material recounted on the date of counting will be processed.

MUST SAY:

"The BCB may determine the verification and counting of packages of banknotes classified as eligible, deposited by Financial Intermediation Entities, applying the same procedures established in article 14 of this Regulation for the counting of packages of unfit banknotes.

If, during the counting process, the equivalent of more than 1% of unfit banknotes and/or non-facing banknotes is found in the daily recounted bundle, the return of said bundle will be processed, which, having been processed by the BCB, must be deposited again in the BCB on the same day."

Article 2.- Repeal Chapter VIII, Additional Provisions of the Regulation on the Administration of Monetary Material.

Article 3.- This Board Resolution will enter into force as of February 5, 2018.

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

La Paz, October 24, 2017

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