Resolution 046/2009 Approving the New Currency Material Administration Regulation

BOARD RESOLUTION NO. 046/2009 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES NEW CURRENCY MATERIAL ADMINISTRATION REGULATION

HAVING VIEWED: The Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia; The Statute of the Central Bank of Bolivia approved by Board Resolution No. 128/2005 of October 21, 2005 and its modifications; The Regulation for the Administration of Currency Material, approved by Board Resolution No. 022/2006 of March 7, 2006; The Regulation for the Issuance, Exchange, and Destruction of Currency Material, approved by Board Resolution No. 108/2001 of October 30, 2001; The Report from the Monetary Operations Management STES No. 039/2009 of March 17, 2009; The SANO Report No. 092/2009 of March 30, 2009 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 as established in Article 37 of Law No. 1670, the Issuing Entity shall be the custodian 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 financial intermediation entities subject to authorization and control by the Institution for the Regulation 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 financial intermediation entities.

That the Regulation for the Monetization, Exchange, and Destruction of Currency Material establishes the obligation to exchange unfit currency material and to break down banknotes into smaller denominations or coins.

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 empowered 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. 39/2009 recommends the modification and updating of the current regulations on Issuance, Exchange, and Destruction of Currency Material, Payment of Cash Shortage Allowance, Administration of Securities in Custody, and Administration of Currency Material.

That the Legal Affairs Management states that there is no legal impediment for the Institution's Board to consider the approval of the new Currency Material Administration Regulation, by two-thirds of the votes of its members, in accordance with what is provided in Article 54 inc. o) of Law No. 1670, since it does not contravene the current legal framework, within the framework of what is stated in Report STES No. 39/2009 and under the protection of the attributions provided in the current legal framework.

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

Article 1.- Approve the new Currency Material Administration Regulation in its VII Chapters and 29 Articles, which, as an Annex, forms an integral part of this Resolution.

Article 2.- This Currency Material Regulation shall enter into force as of June 1, 2009.

Article 3.- Board Resolution No. 022/2006 of March 7, 2006 is hereby repealed as of June 1, 2009.

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

La Paz, April 14, 2009

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Gabriel Loza Tellería

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Gustavo Blacutt Alcalá Hugo Dorado Araníbar

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Rolando Marín Ibáñez Ernesto Yáñez Aguilar

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Rafael Boyán Téllez

ANNEX REGULATION FOR THE ADMINISTRATION OF CURRENCY 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 currency 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 processing of fund withdrawals by the issuance of payment orders or manager's checks according to what is established in Chapter VII of this regulation.

Article 2 (Scope of Application). This Regulation shall be applied to Financial Entities holding Current Accounts and Reserve Accounts or Reserve Accounts, which make deposits and withdrawals in said accounts, as well as to operations carried out with Public Sector entities and to deposits in current fiscal accounts made by the public. It also applies to fund withdrawals by the issuance of payment orders or manager's checks of the BCB.

Article 3. (Terms and Definitions). The terms and definitions of this Regulation are as follows: i. Unfit banknote. Banknote, mutilated, torn, 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 its categories 4, 5, and 6, provided it clearly retains its 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, which 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 currency material is stored and through which it transits. ix. Delegated Administrator. The Banking Financial Entity contracted to provide national currency Treasury services to the BCB. x. BCB. Central Bank of Bolivia. xi. GOM. Monetary Operations Management of the Central Bank of Bolivia. xii. STES. Treasury Sub-management dependent on the Monetary Operations Management of the Central Bank of Bolivia.

CHAPTER II DEPOSITS OF CURRENCY MATERIAL

Article 4. (Deposits). Financial Entities may make cash deposits at the BCB in national currency or United States dollars in the hours defined by the BCB through an express circular issued by its General Management. Banknote deposits shall 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 banknotes of 10 and 20 Bolivianos, only unfit banknotes in these denominations may be deposited. 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 into fit and unfit. Banknote packages in US dollars shall not be classified.

To determine the degradation of banknotes in circulation, the GOM, with the approval of the General Management, will establish a range of six categories that contemplate different states of deterioration. Categories 4, 5, and 6 will be considered unfit for circulation. Similarly, metallic coins that are perforated, filed, or altered will lose their quality as legal tender and will be demonetized and disqualified.

Article 6. (Identification of deposits). The labels of fit banknote packages shall be white. Unfit banknote packages must carry brown labels. In both cases, the following information must be recorded: 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 currency material and amount of the package. v. Place and date of the formation of the package. The bands of the bundles of national currency banknotes contained in the packages must bear the logo of the depositing Financial Entity. The bands of the bundles of US dollar banknotes, contained in the packages deposited by financial entities, must have the characteristics established by the Federal Reserve of the United States, which will be communicated via an external circular from the General Management.

Article 7. (Packaging of banknotes). Banknote packages must be packaged with shrink wrap that bears 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 to be deposited 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, for identification, they must carry labels from the Financial Entity with the same information requested 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 the General Management of the BCB may define through an express Circular.

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

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

CHAPTER III COUNTING OF DEPOSITED CURRENCY 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, at least three business days in advance, for the designation of representatives (observers) to 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 by the BCB, or by the company it determines, in BCB facilities 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 during the counting process, the Financial Entity will be subject to a sanction, as determined in the BCB's Fine Table.

Article 15. (Delivery and registration of recounted currency material). Those responsible for the counting will deliver to the central BCB vault the currency material classified into fit banknote packages and unusable banknote packages.

Unusable banknote packages will be physically transferred to the unusable banknote warehouse for subsequent destruction. Fit banknote packages will remain in the vault.

Article 16. (Discrepancies in counting). If surpluses, shortages, or counterfeit banknotes are established in the counting process of currency 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 in Article 14 of this Regulation for the counting of unfit banknotes. If 5 or more unfit banknotes per package are found in the counting process, the financial entity will be subject to a sanction determined in the BCB's fine table.

CHAPTER IV WITHDRAWAL OF CURRENCY MATERIAL

Article 18. (Withdrawal of cash by Financial Entities). Financial Entities may withdraw cash in national currency and United States dollars charged to their current and reserve accounts or reserve accounts. The delivery by the BCB of national currency or United States dollars will be carried out based on the availability by denomination of the currency material. In the case of national currency, the BCB may carry out the delivery of currency material in localities within the country, according to the request of the Financial Entity and the availability of resources in the BCB's Delegated Administrators. 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 bag.

Article 19. (Delivery Priority). The currency 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 currency material in the presence of observers from the Financial Entity shown on the labels.

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

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

Article 22. (Sending remittances abroad). The General Management of the BCB will authorize in writing the sending of remittances abroad, composed of packages of US dollars deposited by Financial Entities, for credit to the Issuing Entity's accounts. Prior to the sending of the remittance abroad, the STES, in the presence of the observer from 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). The BCB will proceed to the accounting regularization of discrepancies due to shortages, surpluses, and counterfeit banknotes in remittances abroad, as established by the Federal Reserve of the United States of North America, through charges or credits in the current and reserve account or reserve account of the Financial Entity identified on the band or in 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 carry out 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 current Service Tariffs.

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

CHAPTER VI REGISTRATION AND CONTROL OF CURRENCY MATERIAL

Article 26. (Registration). The registration of currency material at 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 package level of one thousand pieces for banknotes, and at the box level for coins.

Fractionated currency material will be registered and controlled through fractional cashiers.

CHAPTER VII OTHER OPERATIONS WITH CURRENCY 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, in hours established in an External Circular from the General Management.

Article 29. (Processing of Payment Orders and Manager's Checks). Payment orders and manager's checks issued by the BCB may be cashed by beneficiaries at the Institution's Treasury cashiers, according to a General Management circular.

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