Resolution 022/2006 Approving the Regulation for the Administration of Monetary Material

BOARD RESOLUTION NO. 022/2006 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL.

HAVING SEEN: Law No. 1670 of October 31, 1995. The Statute of the Central Bank of Bolivia of October 21, 2005. The Regulation for the Administration of Monetary Material and Securities in Custody, approved by Board Resolution No. 141/2003 of December 9, 2003. Board Resolution No. 075/2005 of June 7, 2005, which modifies Article 5 of the Regulation for the Administration of Monetary Material and Securities in Custody. The Regulation for the Issuance, Exchange, and Destruction of Monetary Material, approved by Board Resolution No. 108/2001 of October 30, 2001. The report from the Monetary Operations Management STES No. 013/2006 of March 3, 2006. The SANO Report No. 029/2006 of March 7, 2006 from the Legal Affairs Management.

CONSIDERING: That pursuant to Article 24 of Law No. 1670, all entities of the Public Sector must deposit their funds in fiscal accounts of the Central Bank of Bolivia or in the entity delegated by it.

That Article 29, subsection c) of Law No. 1670, authorizes the Central Bank of Bolivia, in its capacity as Financial Agent of the Government, to receive securities in custody from the State, as well as to delegate their custody to other financial intermediation entities.

That as established by Article 37 of Law No. 1670, the Issuing Entity will be the depository of the liquid reserves intended to cover the legal reserve requirement and to attend to the payment system and other operations with the BCB of the financial intermediation entities subject to authorization and control by the Superintendence of Banks and Financial Entities, and may delegate the custody of these deposits to the same and other financial entities, in accordance with regulations.

That according to what is determined by Article 38, literal a) of Law No. 1670, the Central Bank of Bolivia may receive demand and time deposits in national and foreign currency from the Financial Intermediation Entities.

That the Regulation for the Issuance, Exchange, and Destruction of Monetary Material, as provided in its Article 16, establishes the obligation to exchange unfit monetary material and banknotes for others of lower denomination.

That within the framework of the aforementioned, the Board of Directors of the Central Bank of Bolivia, pursuant to Law No. 1670 in its Article 54, literals a) and o), and in accordance with what is provided by the Statute of the Issuing Entity in its Article 11 numeral 1) and 29), is authorized to issue norms and adopt general decisions that are necessary for it to fulfill the functions, competencies, and powers assigned by the Law.

That the Monetary Operations Management in its Report STES No. 013/2006 recommends the consideration by the Board of the draft Regulations for the Administration of Monetary Material and for the Administration of Securities in Custody.

That the Legal Affairs Management states that in attention to what is provided by Article 54, literals a) and o), and in accordance with what is provided by the Statute of the Central Bank of Bolivia in its Article 11 numeral 1), and 29), it corresponds to the Board to consider both Draft Regulations.

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

Article 1.- Approve, the Regulation for the Administration of Monetary Material, in its VII Chapters and 29 articles, which as an annex forms part of this Resolution.

Article 2.- As of March 8, 2006, Board Resolutions No. 141/2003 of December 9, 2003, and No. 075/2005 of June 7, 2005, are repealed.

Article 3.- This regulation will enter into force on the day of its approval.

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

La Paz, March 7, 2006

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Juan Antonio Morales A.

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Enrique Ackermann A. Fernando Paz B.

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Jaime Apt B.

ANNEX REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL

CHAPTER I OBJECT, TERMS AND DEFINITIONS

Article 1. (Object of the Regulation). This Regulation aims to regulate: i. The deposit, administration, and withdrawal of monetary material, arising from operations carried out by financial entities within the framework of what is established in Title II, Chapter VI of Law No. 1670. ii. 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 by the issuance of payment orders or cashier's checks by Management, according to what is established in Chapter VII of this regulation.

Article 2 (Scope of Application). This Regulation will be applied to Financial Entities that are holders of Current and Reserve Accounts or Reserve Accounts, which make deposits and withdrawals in the aforementioned accounts, as well as to operations carried out with public sector entities and the general public that make deposits in fiscal current accounts. It also applies to fund withdrawals by the issuance of payment orders or cashier's checks of the BCB.

Article 3. (Terms and Definitions). The terms and definitions of this Regulation are as follows: i. Unfit Banknote. Banknote not suitable for circulation due to being damaged, mutilated, torn, with impressions or writings foreign to its original condition, that clearly retain two signatures and a serial number. ii. Bundle of banknotes. Set of one hundred pieces of banknotes of the same denomination, covered by a band. iii. Band. Paper piece that covers each bundle of banknotes, allowing its separation from other bundles. iv. Package of banknotes. Set of one thousand pieces of banknotes of the same denomination, ordered in ten bundles of one hundred pieces each. v. Package of coins. Set of one thousand pieces of coins of the same denomination, ordered in ten cylinders of one hundred coins each. vi. Coin box. Set of coins of the same denomination, that have been packaged in defined quantities for each denomination, by the minting house. vii. Label. Tag that contains data allowing the identification of the financial entity that formed the package of banknotes or coins and that is adhered to it. viii. Site. The physical place, enabled in the Treasury Module, where monetary material is stored and through which it transits. ix. Delegated Administrator. The Banking Financial Entity contracted to provide Treasury services in national currency to the BCB. x. BCB. Central Bank of Bolivia. xi. GOM. Monetary Operations Management of the Central Bank of Bolivia xii. STES. Sub-Department of Treasury dependent on the Monetary Operations Management of the Central Bank of Bolivia.

CHAPTER II DEPOSITS OF MONETARY MATERIAL

Article 4. (Deposits). Financial Entities may make cash deposits in 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. 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. Coin deposits in national currency require prior authorization from the GOM, provided that they do not affect the availability in circulation of the respective denomination.

Article 5. (Classification). Banknote packages for deposit in national currency must be classified by the Financial Entity as fit and unfit. Banknote packages in US dollars will not be classified.

Article 6. (Identification of deposits). The labels of the banknote packages must carry the following information: i. Name and logo of the depositing Financial Entity. ii. Name or stamp of the Company that formed the package, if applicable. iii. Full name, signature, and stamp of the person who formed the package. iv. Denomination of the monetary material and amount of the package. v. Place and date of the formation of the package. The bands of the bundles of banknotes contained in the packages must carry the logo of the depositing Financial Entity.

Article 7. (Packaging of banknotes). Banknote packages must be packaged with shrink wrap that carries the logo of the depositing Financial Entity. The use of any other tying and packaging material will not be accepted.

Article 8. (Packaging and identification of coin deposits). Coins for deposit must be packaged in cylinders containing one hundred pieces of the same denomination; ten of these cylinders packaged in shrink wrap will form a package of one thousand pieces. Likewise, they must carry labels of the Financial Entity for identification, with the same information indicated for banknote packages.

Article 9. (Receipt). Deposits will be received in the security areas of the STES, where the following will be verified: i. The information contained in the labels adhered to the banknote and/or coin packages. ii. The existence of ten bundles of banknotes in each package separated by their respective bands, which must show the logo of the depositing Financial Entity. iii. The correct packaging in shrink wrap. iv. In the case of coin deposits, the existence of ten cylinders of the same denomination in each package. v. Other requirements that may be defined by the General Management of the BCB through an express Circular.

Article 10. (Registration and Custody). Once the receipt requirements for monetary 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 in Delegated Administration). Financial Entities may make deposits of monetary material in national currency in the Delegated Administrators of the BCB. The Delegated Administrators, for the receipt of deposits, must comply with what is established in this Regulation, in the Delegated Administration Contract, and in the Operational Procedures Guide for Treasury Services in National Currency.

Article 12. (Security). The deposit and withdrawal of monetary material must be carried out by the Financial Entity through the use of armored vehicles.

CHAPTER III COUNTING OF DEPOSITED MONETARY MATERIAL

Article 13. (Counting Scheduling). The BCB through the STES will schedule the counting of banknote packages in national currency classified as unfit and will communicate the counting date to the corresponding Financial Entity, with an advance of at least three business days, for the designation of representatives (observers) who will witness and validate the process and its results.

Article 14. (Counting of unfit banknotes). Banknote packages in national currency classified as unfit will be recounted and verified at the BCB, or by the company it determines, in BCB environments and in the presence of observers from the Financial Entity that made the deposit of the packages. If five or more fit banknotes are found in each package classified as unfit during the counting process, the Financial Entity will be subject to a sanction, as determined in the BCB Fine Table.

Article 15. (Delivery and registration of recounted monetary material). The persons responsible for the counting will deliver to the central vault of the BCB the monetary material classified in packages of fit banknotes and packages of unusable banknotes. The packages of unusable banknotes will be physically transferred to the unusable banknotes warehouse for subsequent destruction. The packages of fit banknotes will remain in the vault.

Article 16. (Discrepancies in counting). If surpluses, shortages, or counterfeit banknotes are established in the counting process of monetary material, charges and credits will be made in the current and reserve account or reserve account of the corresponding Financial Entity, within a maximum period of one (1) business day after the discrepancies are established.

Article 17. (Counting of fit banknotes). The BCB may determine the verification and counting of banknote packages classified as fit deposited by Financial Entities, applying the same procedures established for the counting of banknote packages classified as unfit.

CHAPTER IV WITHDRAWAL OF MONETARY MATERIAL

Article 18. (Withdrawal of cash by Financial Entities). Financial Entities may withdraw cash in national currency and United States dollars from their current and reserve accounts or reserve accounts. The delivery by the BCB of national currency or United States dollars will be made based on the availability by denomination of the monetary material. In the case of national currency, the BCB may make the delivery of monetary material in localities within the country, according to the request of the Financial Entity and the availability of resources in the Delegated Administrators of the BCB. The quantities to be withdrawn in banknotes will correspond to a package as a minimum, and in the case of coins, to a box or a package.

Article 19. (Delivery Priority). The monetary material to be delivered will preferably be that deposited by the same Financial Entity. If there are no packages from the same Financial Entity in the requested denomination, the STES will deliver packages deposited by another Financial Entity or those belonging to the BCB. The Financial Entity making the withdrawal may request the counting and verification of the monetary material in the presence of observers from the Financial Entity that appears on the labels.

Article 20. (Withdrawal in Delegated Administrators). Financial Entities may make withdrawals of monetary material in national currency from the Delegated Administrators in accordance with what is established in the Delegated Administration Contract and in the Operational Procedures Guide for Treasury Services in National Currency.

Article 21. (Collection of funds in custody). The BCB may, at any time, withdraw from the Delegated Administrators monetary material corresponding to funds in custody in accordance with what is established in the Delegated Administration Contracts and the Operational Procedures Guide for Treasury Services in National Currency.

Article 22. (Sending remittances abroad). The General Management of the BCB will authorize in writing the sending of remittances abroad, for credit to accounts of the Issuing Entity, of packages of US dollars deposited by Financial Entities. Prior to the remittance abroad of the packages of US dollars, the STES, in the presence of the observer of the depositing Financial Entity, will verify that the logo of the depositing Financial Entity is present on all bands of each bundle of the banknote package and that the label corresponds to the same Entity.

Article 23. (Discrepancies in verification of remittances abroad). For discrepancies of shortages, surpluses, and counterfeit banknotes in remittances abroad, which are established by the Federal Reserve of the United States of North America, the BCB will proceed to their accounting regularization through charges or credits in the current and reserve account or reserve account of the Financial Entity identified on the band or through the documentation sent by the Federal Reserve, within one business day of receiving the supporting documentation.

CHAPTER V COMMISSIONS

Article 24. (Commissions for movements in national currency). Financial Entities may make daily movements of cash in national currency with the BCB free of charge. From the second cash movement, the BCB will charge a commission according to the prevailing Service Tariffs.

Article 25. (Commissions for movements in foreign currency). Movements in cash in foreign currency that Financial Entities make with the BCB will be subject to a commission, as established in the prevailing Service Tariffs.

CHAPTER VI REGISTRATION AND CONTROL OF MONETARY MATERIAL

Article 26. (Registration). The registration of monetary material in 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 in the case of banknotes and of boxes in the case of coins. Fractionated monetary material will be registered and controlled through fractional boxes.

CHAPTER VII OTHER OPERATIONS WITH MONETARY 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, according to General Management circular.

Article 29. (Attention to Payment Orders and Cashier's Checks). Payment orders and cashier's checks issued by the BCB may be collected by beneficiaries in Treasury boxes of the Institution, according to General Management circular.

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