Resolution 108/2001 Approving the Regulation for the Issuance, Exchange, and Destruction of Monetary Material

BOARD RESOLUTION NO. 108/2001
SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES REGULATION FOR THE ISSUANCE, EXCHANGE, AND DESTRUCTION OF MONETARY MATERIAL

HAVING SEEN:
Law No. 1670 of October 31, 1995.
Supreme Decree No. 25964 of October 21, 2000, which approves the Basic Norms of the System for the Administration of Goods and Services.
The Statute of the Central Bank of Bolivia of February 20, 1997.
Board Resolution No. 110/93 of September 8, 1993.
Board Resolution No. 044/98 of April 7, 1998, which approves the Regulation for the Issuance and Destruction of Monetary Material.
Board Resolution No. 037/2000 of June 13, 2000, which approves the Regulation for the Provision of Banknotes and Coins.
The Report from the Monetary Operations Management STES No. 041/2001 of September 21, 2001.
The Report from the Legal Affairs Management SANO No. 030/2001 of September 27, 2001.

CONSIDERING:
That Law No. 1670 in its Articles 10, 11, 12, and 54, subsections o) and m), establishes the functions of the Central Bank of Bolivia (BCB) regarding the issuance of banknotes and metallic coins, as well as the attributions of the Board to authorize and supervise the printing, issuance, and destruction of monetary material.

That Article 72 of the Statute of the Central Bank of Bolivia establishes the functions of the Monetary Operations Management to supervise the printing, issuance, distribution, and destruction of monetary material.

That through Board Resolution No. 110/93, the participation of the Board in the destruction of monetary material was authorized.

That through Board Resolution No. 044/98, the Regulation for the Issuance and Destruction of Monetary Material was approved.

That according to the Report from the Monetary Operations Management STES No. 041/2001, it is recommended to update the regulation for the Issuance, Exchange, and Destruction of Monetary Material.

That according to the Report from the Legal Affairs Management SANO No. 030/2001, it is established that the draft regulation can be considered by the Board of the Central Bank of Bolivia.

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

Article 1.- Approve the Regulation for the Issuance, Exchange, and Destruction of Monetary Material in its six (6) chapters and twenty-six (26) Articles.

Article 2.- This Regulation shall enter into force on January 1, 2002.

Article 3.- Repeal, from the entry into force of this regulation, Board Resolutions 044/98 and 110/93.

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

La Paz, October 30, 2001

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Juan Antonio Morales A.

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Armando Pinell S. Juan Medinaceli V.

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Armando Méndez M. Roberto Camacho S. Javier Comboni S.

ANNEX
REGULATION FOR THE ISSUANCE, EXCHANGE, AND DESTRUCTION OF MONETARY MATERIAL

CHAPTER I
OBJECT AND DEFINITIONS

Article 1.- (Object)
This Regulation aims to regulate the issuance, exchange, demonetization, and destruction of monetary material, as well as the issuance of coins for commemorative purposes.

Article 2.- (Definitions)
Monetization: The exclusive function of the Central Bank of Bolivia as the sole issuer of the Boliviano to put into circulation banknotes and coins of legal and mandatory tender with unlimited liberatory power.

Demonetization: The process by which Boliviano banknotes and coins are withdrawn from legal circulation.

CHAPTER II
ISSUANCE OF BANKNOTES AND COINAGE OF COINS

Article 3.- (Need for banknotes and coins)
The Monetary Operations Management (GOM), through the General Management, will present to the Board for consideration the future needs for banknotes and coins, detailing the estimated total volume by denominations and the technical characteristics of the monetary material.

The GOM, through the General Management, will request authorization from the Board for the coinage of coins for commemorative or numismatic purposes, detailing the technical specifications and forms of commercialization.

Article 4.- (Authorization)
The Board, through an express resolution and considering the technical and legal reports, will authorize the start of the process for the printing of banknotes and the coinage of coins.

Article 5.- (Design)
The Board of the BCB will approve the designs of banknotes and coins presented by the BCB Administration.

Article 6.- (Bidding)
The bidding processes for the printing of banknotes and coinage of coins will be subject to what is determined in the Regulation for the Provision of Banknotes and Coins and its subsequent modifications.

Article 7.- (Reception and registration)
The GOM will receive in the BCB vaults and in security environments designed for this purpose, the banknotes manufactured and coins coined by the companies contracted for this purpose, registering them as "Monetary Material in Warehouses," with identification of the total nominal value of each of the denominations. In the case of specimens or samples without value, the registration will be made in "Values in Custody" in the respective account.

Article 8.- (Verification of materials used)
The GOM must verify the balance of materials used in the manufacturing of Banknotes and in the coinage of Coins. Likewise, the GOM must verify, at the production site, the destruction of all remaining material used in the manufacturing of the monetary material. The GOM must request the matrices and dies used in the printing and coinage, respectively, for their custody in the BCB, unless the production process does not require the use of these elements.

CHAPTER III
MONETIZATION OF BANKNOTES AND COINS

Article 9.- (Authorization of monetization)
The Board of the BCB, through an express resolution, will authorize the monetization of the monetary material based on the reception reports of the same and according to the issuance requirements determined by the GOM. If the reception of the monetary material is made in partial shipments, the Board may authorize its monetization through an express resolution, based on the issuance requirements of new monetary material for the economy, determined by the GOM.

Article 10.- (Certificate of monetization)
The monetization authorized by the Board will be recorded in an act that will be signed by the General Manager, the Manager of Monetary Operations, and the Submanager of Treasury.

Article 11.- (Registration of monetization)
The GOM will register the monetization of banknotes and coins, transferring accountingly the nominal value of each of the denominations from "Monetary Material in Warehouses" to the "Central Vault" account.

Article 12.- (Dissemination)
Once the monetization is authorized, the characteristics of the monetary material will be disseminated.

Article 13.- (Distribution)
The GOM will put the monetary material into circulation through the financial intermediation system, through entities specifically contracted for this purpose, its own offices, or other distribution mechanisms. The General Management will determine and implement in each case the most appropriate mechanisms for the efficient distribution of monetary material in the economy.

The GOM, through the General Management, will present to the Board a semi-annual program for the distribution of monetary material.

Article 14.- (Structure of distribution)
The GOM will determine the structure of denominations for the distribution of monetary material based on public requirements, the structure by denominations of the ineligible and available monetary material, and other factors.

CHAPTER IV
EXCHANGE AND WITHDRAWAL OF MONETARY MATERIAL

Article 15.- (State of deterioration of monetary material)
Torn, broken banknotes, those with prints or writing foreign to their original condition, as well as banknotes that present a high degree of deterioration, will be considered ineligible for circulation.

To determine the degradation of banknotes in circulation, the GOM, with the approval of the General Management, will establish a range of five categories showing different states of deterioration. Categories 3, 4, and 5 will be considered ineligible for circulation.

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

Article 16.- (Exchange of monetary material)
According to Article 13 of Law No. 1670, every financial intermediation institution in all its branches and agencies is obligated to exchange damaged banknotes, as determined in the preceding Article, at their nominal value, when they clearly retain two signatures and a serial number.

Financial intermediation entities are also obligated to exchange banknotes for others of smaller denominations, in all their branches and agencies.

The General Secretariat will provide financial intermediation entities with posters indicating this obligation, which must be placed in visible places in all their branches and agencies.

Article 17.- (Sanctions for non-compliance)
The General Management will coordinate with the Superintendence of Banks and Financial Entities the application of fines and sanctions for non-compliance with the functions described in the preceding Article.

Article 18.- (Withdrawal from circulation of monetary material)
Financial intermediation institutions must classify the monetary material exchanged with the public and identify that proposed for ineligibility based on the criteria determined in Article 15 of this Regulation.

The GOM will verify that the proposed monetary material meets the criteria for ineligibility and once classified as ineligible, it will withdraw it from circulation. This verification will be carried out through sampling, according to technical and statistical criteria defined by the GOM. The verification may be delegated to an entity qualified for this purpose.

Article 19.- (Compensation and fines for withdrawal from circulation)
To facilitate the withdrawal of deteriorated monetary material, the BCB may make a payment to entities for each package of ineligible material sent to the BCB, above a minimum monthly quantity of packages per financial entity. The General Management will annually propose to the Board the general terms for the application of this payment.

Financial intermediation entities that have delivered as ineligible monetary material in good condition will be subject to fines. These fines, to be applied by the GOM, will be determined annually by the Board in the Table of Commissions and Other Income.

Article 20.- (Withdrawal due to design change)
The BCB may withdraw from circulation the monetary material whose substitution has been decided due to a change in design, based on the procedure used for ineligible monetary material.

CHAPTER V
DESTRUCTION OF MONETARY MATERIAL

Article 21.- (Destruction)
The monetary material withdrawn from circulation will be physically destroyed in the Treasury area, dependent on the GOM, using mechanisms that eliminate the possibility of reconstruction or reuse.

Article 22.- (Supervision)
The verification of the monetary material to be destroyed will be carried out by a group composed of the Manager of Monetary Operations, the Submanager of Treasury, a representative designated by the General Manager, and a Notary of Public Faith. These last two must supervise the complete destruction process and provide a record of the same.

In each destruction session, the corresponding Act will be drawn up, recording the denominations, number of packages, number of pieces, value of the destroyed material, and verification by sampling carried out by the BCB Treasury. The Act will be signed by all participants.

Article 23.- (Destination of waste)
The waste from destroyed banknotes will be buried in places determined in common agreement with the respective Municipal Mayors or will be destined to other uses with the authorization of the General Management. The use of the waste from destroyed coins will be determined and authorized by the General Management.

CHAPTER VI
OTHERS

Article 24.- (Reports from the Monetary Operations Management)
The GOM, through the General Management, will submit to the Board semi-annual reports concerning the existing balances of monetary material, the evolution of its distribution, the quality of the monetary material in circulation, the results of the banknote and coin destruction processes, and other aspects related to the use of monetary material.

Article 25.- (Reproduction of images of monetary material)
The partial or total reproduction of images of monetary material will only be permitted by any natural or legal person when the dimension of the reproduced image is at least 50% larger or smaller than the dimensions of the original monetary material and the material used for the reproduction does not generate confusion with the original material.

Article 26.- (Valueless specimens or samples)
The GOM may send valueless specimens or samples to other Central Banks. The General Management will expressly authorize the delivery of valueless specimens and samples to BCB authorities and related entities.