Resolution 023/2006 Approving the Custody of Securities Regulations

BOARD RESOLUTION NO. 023/2006 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES REGULATIONS ON CUSTODY OF SECURITIES.

VIEWING: 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 Custody of Securities, 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 Custody of Securities. 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 report SANO 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 according to Article 37 of Law No. 1670, the Issuing Entity shall be the depository of the liquid reserves intended to cover the legal reserve and attend the payment system and other operations with the BCB of the financial intermediation entities subject to authorization and control of the Superintendence of Banks and Financial Entities, being able to delegate the custody of these deposits to the same and other financial entities, according to regulation.

That as 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, according to its Article 16, establishes the obligation to exchange unusable 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 pursuant to 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 projects of the Regulations for the Administration of Monetary Material and the Administration of Custody of Securities.

That the Legal Affairs Management states that in attention to what is provided by Article 54, literals a) and o), and pursuant to 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 Regulation Projects.

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

Article 1.- Approve, the Regulation for the Administration of Custody of Securities, in its III Chapters and 17 articles, which as an annex forms part of this Resolution.

Article 2.- This regulation will enter into force on the day of its approval.

Article 3.- 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. Jaime Apt B.

ANNEX REGULATION FOR THE ADMINISTRATION OF CUSTODY OF SECURITIES

CHAPTER I OBJECT, TERMS AND DEFINITIONS

Article 1 (Object of the Regulation). This regulation has the object of establishing norms for:

1. The receipt and return of securities in custody carried out by authorized entities of the public sector, within the framework of what is established in Title II of Chapter V of Law 1670.
2. The receipt and return of securities in custody of banks and financial intermediation entities within the framework of what is established in Title II of Chapter VI of Law 1670.
3. The receipt and return of securities in custody carried out by the different areas of the BCB.

Article 2. (Scope of Application). This regulation will apply to entities of the public sector, financial entities, and areas of the BCB that require the deposit and/or withdrawal of securities in custody.

Article 3. (Terms and Definitions). The terms and definitions applicable to this Regulation are the following:

1. Deposit or Withdrawal Act, document signed by the participants as proof of the receipt or return of securities in custody.
2. BCB, Central Bank of Bolivia
3. Applicant, public sector entity, financial system entity, or BCB Area that requests the deposit or withdrawal of securities in custody.
4. Authorized Signatures, persons designated by the Applicants to participate in the procedures for receipt and return of securities in custody and to sign the respective documents.
5. GOM, Monetary Operations Management
6. STES, Treasury Sub-Management
7. Securities in Custody, securities subject to deposit in custody at the BCB that correspond to: Seizures, Historical Documents and Objects, Financial Securities, and Numismatic Securities. a) Seizures. Drug samples not exceeding ten grams, money, jewelry, and securities seized, as determined in Law 1008. b) Historical Documents and Objects. Manuscripts, acts, publications, and other prints with historical value. The Presidential Medal, the Vicepresidential Medal, the Medal of the President of the Senate, and other jewelry with historical value. c) Financial Securities. Promissory notes, bonds, shares, bills, guarantee certificates, and any other value regulated by the national legal order, valid, issued, or endorsed in favor of a public sector entity or the financial system. d) Numismatic Securities. Specimens and collections of banknotes and coins, Bolivian and foreign medals with numismatic value, matrices, plates, dies, or other objects used in the manufacture of monetary material.

CHAPTER II PROCEDURES FOR THE RECEIPT OR RETURN OF SECURITIES IN CUSTODY

Article 4. (Securities subject to custody deposits). The BCB will receive deposits of securities for custody from the following entities: a) Financial Entities: Financial Securities b) Public Sector Entities: Financial Securities, Compensation Certificates Contributions, seizures, Presidential Medal, Vicepresidential Medal, Senate Medal. Exceptionally, other historical documents and objects, prior to the issuance of an express Supreme Resolution. c) BCB: Financial Securities, historical documents and objects; numismatic securities through the GOM.

Article 5. (Application). The Applicant that requires making deposits in custody at the BCB or withdrawing securities in custody, must present to the GOM a request note signed by its highest authority or legal representative authorized for this effect and containing at least the following information: a) Identification of the Applicant b) Description of the securities to be custodied or withdrawn c) Description of the container of the securities to be custodied. In the case of boxes, specify the dimensions. Time of the deposit, which may be indefinite. d) Name, position, and identity card number of each of the persons designated as authorized signatures of the Applicant, to make the deposit or withdrawal and sign the Deposit Act. e) In case of requiring the participation of a Notary of Public Faith, specify name and identity card number. f) In case of withdrawal, a copy of the Deposit Act or the deposit code must be attached.

Article 6. (Programming of the operation). Once the application is accepted, the BCB through the GOM will define and communicate to the Applicant the hour and date for the receipt or withdrawal of the Securities in Custody and will designate the STES personnel that will participate in the operation, among which must necessarily include the Sub-manager or the Department Head.

Article 7. (Operation). On the agreed date and hour, the STES will verify the following requirements: a) The correspondence of the values, with the declaration made by the Applicant. In case of withdrawal, it must additionally verify the correspondence with the data registered in the Deposit Act. b) The state of the value to be custodied as well as its container if applicable, so that its custody does not represent a risk for the environments or the BCB personnel. c) The correct identification of the Applicant's representatives, including when applicable the Notary of Public Faith mentioned in Article 5 of this Regulation. If any of the requirements are not met, the STES personnel will suspend the process of receipt or withdrawal of the Securities in Custody.

Article 8. (Sealed containers). Unless it concerns Financial Securities and/or jewelry, the Applicant may make the deposit of Securities in Custody in a sealed container. In this case, the STES personnel will not verify the content, taking care however that the container is in perfect conservation state at the moment of its deposit.

Article 9. (Deposit or Withdrawal Act). Once the requirements are met, the assistants will sign a Deposit or Withdrawal Act, as appropriate, prepared by the STES, which includes at least the following information: a) Date and time of the receipt or return b) Description of the Security in Custody. In the case of sealed containers, the expression "Says to Contain" must be recorded c) Identification of the participants. The GOM through the STES will deliver a copy of the Deposit or Withdrawal Act to the authorized signatures of the Applicant.

Article 10. (Notarized Acts). The Applicant may raise, under its responsibility and cost, Notarized Acts of the Deposit and/or Withdrawal of the Security in Custody, prior communication of this determination to the GOM, pursuant to what is provided in Article 5 of this Regulation.

Article 11. (Physical Custody). The GOM through the STES, in application of its internal procedures, will carry out the deposit and withdrawal of the Securities in Custody in the security areas of the BCB. In no case will the Applicant's representatives enter the security areas of the BCB.

Article 12. (Registration). The GOM through the STES will carry out the registration of the Securities in Custody in the Custody of Securities System (SIVAC).

Article 13 (Commissions and Interests). The BCB will not charge commissions nor pay interests for the receipt of Securities in Custody.

Article 14 (Force Majeure and Fortuitous Event). In cases of force majeure or fortuitous event that are not the responsibility of the BCB, it will not have the obligation to restore or compensate the Security in Custody.

Article 15 (Securities in custody of other BCB areas). The BCB areas that require depositing securities in custody will apply the procedures detailed in this Regulation, corresponding to the highest authority of each Area to make the request through internal communication and accredit the respective official to participate in the delivery or withdrawal of the securities in custody.

CHAPTER III COMMEMORATIVE COINS AND MEDALS

Article 16. (Custody). The gold and silver commemorative coins and medals owned by the BCB will be registered within the category of securities in custody, including those intended for sale.

Article 17. (Withdrawal of commemorative coins and medals). The withdrawal from custody of the gold and silver commemorative coins and medals, by sale of the same, will be carried out according to procedures established by General Management Circular.

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