Resolution 117/2009 Approving the Regulation on Monetization, Distribution, and Destruction of Monetary Material

DIRECTORATE RESOLUTION NO. 117/2009
SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE NEW REGULATION ON MONETIZATION, DISTRIBUTION, AND DESTRUCTION OF MONETARY MATERIAL OF THE CENTRAL BANK OF BOLIVIA.

VIEWED:
The Political Constitution of the State approved by referendum on January 25, 2009, and officially published on February 7, 2009.
Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB).
The Statute of the BCB approved by Directorate Resolution No. 128/2005 of October 21, 2005 and subsequent modifications.
The Regulation on Monetization, Exchange, and Destruction of Monetary Material approved by Directorate Resolution No. 47/2009 of April 14, 2009, effective from July 15, 2009 in accordance with Directorate Resolution No. 074/2009 of June 23, 2009. The Report from the Monetary Operations Management STES No. 88/2009 of September 1, 2009. The Report from the Legal Affairs Management SANO No. 268/2009 of September 10, 2009.

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 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 to authorize and supervise the printing, issuance, and destruction of monetary material, being empowered to issue the norms and adopt the general decisions necessary for its compliance.

That pursuant to article 30 of Law No. 1670, all financial intermediation entities and financial services, whose operation is authorized by the Superintendence 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 67 of the Statute of the Central Bank of Bolivia establishes that the Monetary Operations Management is responsible for establishing the requirements for the acquisition, distribution, destruction, and administration of monetary material.

That since the operations of exchange and fractionalization of monetary material are subject to specific regulation, it corresponds that they be suppressed from the Regulation on Monetization, Exchange, and Destruction of Monetary Material currently in force, requiring in consequence the modification of its denomination and structure.

That the Monetary Operations Management through Report STES No. 88/2009, recommends the approval of the modifications to the Regulation on Monetization, Exchange, and Destruction of Monetary Material of the BCB, regarding the suppression of the operations of exchange and fractionalization of monetary material.

That the Legal Affairs Management through Report SANO No. 268/2009, states that there is no legal impediment for the Board of Directors of the Issuing Entity, in the exercise of its faculties, to consider the approval of the Regulation on Monetization, Distribution, and Destruction of Monetary Material of the BCB.

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

Article 1.- Approve the Regulation on Monetization, Distribution, and Destruction of Monetary Material, in its V chapters and 17 articles, which in the annex, forms an integral part of this Resolution.

Article 2.- This Regulation shall enter into force from January 2, 2010.

Article 3.- Repeal Directorate Resolutions No. 047/2009 of April 14, 2009 and No. 074/2009 of June 23, 2009, from January 2, 2010.

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

La Paz, October 6, 2009

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Gabriel Loza Tellería

_________________________ _________________________ Gustavo Blacutt Alcalá Hugo Dorado Araníbar

_________________________ _________________________ Rolando Marín Ibáñez Ernesto Yáñez Aguilar

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Rafael Boyán Téllez

ANNEX
REGULATION ON MONETIZATION, DISTRIBUTION, AND DESTRUCTION OF MONETARY MATERIAL

CHAPTER I
OBJECT AND DEFINITIONS

Article 1.- (Object)
The purpose of this Regulation is to govern the monetization, distribution, demonetization, and destruction of monetary material.

Article 2.- (Definitions)
Monetization: Privative function of the Central Bank of Bolivia as the sole issuer of the Boliviano to put into circulation banknotes and coins of legal and compulsory course with unlimited liberatory power.
Demonetization: Process by which Boliviano banknotes and coins are withdrawn from legal circulation.

CHAPTER II
MONETIZATION OF BANKNOTES AND COINS

Article 3.- (Authorization of monetization)
The Board of Directors of the BCB, by express resolution, will authorize the monetization of monetary material based on reports from the Monetary Operations Management (GOM) and the Legal Affairs Management (GAL), in function of the issuance or storage requirements determined by the GOM.

Article 4.- (Certificate of monetization)
The monetization authorized by the Board will be recorded in an act signed by a Director designated by the Board of Directors of the BCB, the General Manager, the Manager of Monetary Operations, and the Deputy Manager of Treasury.

Article 5.- (Registration of monetization)
The GOM will register the monetization of banknotes and coins, accounting transferring the nominal value of each of the denominations of "Monetary Material in Warehouses" to the "Central Vault" account.

Article 6.- (Dissemination)
Prior to putting a new family, series of banknotes, or a new coinage into circulation, the main characteristics of this monetary material will be disseminated.

CHAPTER III
DISTRIBUTION OF MONETARY MATERIAL

Article 7.- (Distribution)
The GOM will put monetary material into circulation through the financial intermediation system, its own offices, or other distribution mechanisms authorized by the Board.
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 8.- (Structure of distribution)
The GOM will determine the structure of cuts for the distribution of monetary material based on public requirements, the structure by cuts of unavailable and available monetary material, and other factors.

Article 9.- (Distribution of lower denomination banknotes through automated teller machines)
Financial entities are obligated to distribute ten and twenty Boliviano banknotes, and fifty or one hundred Boliviano banknotes alternately, through their automated teller machines, in such a way that there are always banknotes of smaller cuts of the boliviano in all ATMs.

CHAPTER IV
WITHDRAWAL AND DESTRUCTION OF MONETARY MATERIAL

Article 10.- (Withdrawal of monetary material from circulation)
After verifying the monetary material sent as unfit by financial institutions, the GOM will proceed to withdraw said monetary material for its subsequent destruction. This verification may be carried out by sampling, according to technical and statistical criteria defined by the GOM. The verification may be delegated to an entity qualified for this purpose.

Article 11.- (Withdrawal by design change)
The BCB may withdraw from circulation monetary material whose substitution has been decided due to a change in design, family, or substrate, following the procedure used for the withdrawal of unfit monetary material.

Article 12.- (Destruction)
The monetary material withdrawn from circulation, after being rendered useless, will be physically destroyed in the Treasury area, using mechanisms that eliminate the possibility of reconstruction or reuse.

Article 13.- (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 Deputy Manager of Treasury, a representative designated by the General Manager, and a Notary of Public Faith. The latter two must supervise the complete destruction process and provide a record thereof. In each destruction session, the corresponding Act will be drawn up, recording the cuts, number of packages, number of pieces, value of the destroyed material, and the sampling verification of said material. The Act will be signed by all participants.

Article 14.- (Destination of waste)
The waste from destroyed banknotes will be buried in places determined by common agreement with the respective Municipal Mayors or will be destined to other uses with the authorization of the General Management.
The use of waste from destroyed coins will be determined and authorized by the General Management.

CHAPTER V
OTHERS

Article 15.- (Reports from the Monetary Operations Management)
The GOM, through the General Management, will submit semi-annual reports to the Board concerning existing balances of monetary material, evolution of its distribution, quality of monetary material in circulation, results of the destruction processes of banknotes and coins, and other aspects related to the management of monetary material.

Article 16.- (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 reproduction does not generate confusion with the original material.

Article 17.- (Specimens or samples without value)
The GOM may send specimens or samples without value to other Central Banks. The General Management will expressly authorize the delivery of specimens and samples without value to BCB authorities and related entities.