Resolution 141/2003 Approving the Regulation for the Administration of Monetary Material and Custody of Securities

BOARD RESOLUTION NO. 141/2003 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL AND CUSTODY OF SECURITIES

HAVING SEEN: Law No. 1670 of October 31, 1995, Law of the Central Bank of Bolivia. The Statute of the Central Bank of Bolivia, approved by Board Resolution 128/2001 of December 13, 2001. The Regulation for the Issuance, Exchange, and Destruction of Monetary Material, approved by Board Resolution 108/2001 of October 30, 2001. The Technical Report STES/022/2003 of November 21, 2003 from the Monetary Operations Management. The Legal Reports SANO 222/2003 of November 20, 2003 and SANO 228/2003 of November 27, 2003 from the Legal Affairs Management. The note from the General Management GGRL. I. No. 973/2003 of December 9, 2003.

CONSIDERING: That as determined in Article 29, subsection c) of Law 1670, the Central Bank of Bolivia, in its capacity as the government's financial agent, may “receive securities in custody from the State, in the cases and under the conditions specified by the BCB, and may delegate this function to other banks and entities in the financial system”.

That as determined in Article 38, subsections a) and c) of Law 1670, the BCB, within the framework of its functions related to the Financial System, may “receive demand and time deposits in national and foreign currency” and “accept securities in custody” from banks and financial intermediation entities.

That as determined in Article 37 of Law 1670, the BCB is

//2. B.R. No. 141/2003 “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 entities of financial intermediation subject to authorization and control of the SBEF”, being able to “delegate the custody of these deposits to the same and other financial entities, according to regulation”.

That Technical Report No. STES/022/2003 considers it necessary to determine a global and uniform regulatory framework for vault management, considering both the administration of Monetary Material and the Custody of Securities, which allow for adequate and secure handling of the securities safeguarded by the Central Bank of Bolivia.

That Legal Report SANO 222/2003 considers that what is provided in the draft Regulation for the Administration of Monetary Material and Custody of Securities does not contravene current legal provisions.

That Legal Report SANO 228/2003 considers that the requirement of prior notices for the withdrawal via checks of monetary material in dollars from the current accounts of financial entities does not correspond.

That as determined in Article 54, subsections a) and o) of Law No. 1670 and in Article 11, Numerals 1 and 30 of the BCB Statute, the BCB Board has the attributes of “issuing norms and adopting general decisions that are necessary for the BCB to fulfill the functions, competence, and powers assigned to it by the Law” and “approving (...) Regulations, by two-thirds of the votes of all its members”.

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

Article 1.- Approve the Regulation for the Administration of Monetary Material and Custody of Securities in its 3 Chapters, 29 Articles, and 1 Transitory Provision, which in the annex, forms part of this Resolution.

Article 2.- The Regulation will enter into force on January 1, 2004.

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Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, December 9, 2003.

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Juan Antonio Morales A.

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Juan Medinaceli V. Enrique Ackermann A.

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José Luis Evia V. Fernando Paz B.

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Jaime Apt B.

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ANNEX REGULATION FOR THE ADMINISTRATION OF MONETARY MATERIAL AND CUSTODY OF SECURITIES

CHAPTER I OBJECT, TERMS AND DEFINITIONS

Article 1. (Object of the Regulation). This Regulation aims to establish norms for:

1. The deposit, administration, and withdrawal of monetary material, carried out by financial entities within the framework of what is determined in Title II, Chapter VI of Law 1670.
2. The receipt and return of Securities in Custody carried out by BCB areas, public sector entities, and the financial system, within the framework of what is determined in Title II, Chapters V and VI of Law 1670.

Article 2. (Scope of Application). This Regulation will apply to financial entities that carry out operations with monetary material with the BCB, as well as to financial entities, public sector entities, and BCB areas that require the deposit 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 who attend the act of deposit or withdrawal of the Security in Custody, as proof of its receipt or return.
2. Requesting Agent Public sector entity, BCB area, or financial entity subject to authorization and control of the Superintendence of Banks and Financial Entities, that requests the deposit or withdrawal of Securities in Custody.
3. Band Paper piece that covers each bundle of banknotes, allowing their separation from other bundles.
4. Unfit Banknote Banknotes mutilated, torn, with impressions or writings foreign to their original condition, as well as banknotes that present a high degree of deterioration, will be considered unfit for circulation.
5. Authorized Signatories, Persons designated by the Requesting Agent, by note from the Highest Executive Authority, in the case of public sector entities; by Special Notarial Power, in the case of financial intermediation entities; and by internal communication signed by the Area Manager in the case of the BCB, to participate in the procedures for receipt and return of Securities in Custody and to sign the respective documents.
6. GOM Monetary Operations Management
7. Tag Label that contains data about the entity that formed the package of banknotes or coins and that is attached to it.
8. Banknote Package Set of one thousand pieces of banknotes of the same denomination, ordered in ten bundles of one hundred pieces each.
9. Coin Package Set of one thousand pieces of coins of the same denomination, ordered in ten cylinders of one hundred coins each.
10. Securities in Custody Assets subject to deposit in custody at the BCB, classified into Seizures, Documents and Historical 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) Documents and Historical Objects. Manuscripts, acts, publications, and other printed materials with historical value. The Presidential Medal, the Vicepresidential Medal, and other jewelry with historical value. c) Financial Securities Promissory notes, bonds, shares, bills, guarantee certificates, and any other value regulated by our 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.

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CHAPTER II PROCEDURE FOR THE ADMINISTRATION OF MONETARY MATERIAL

FIRST SECTION DEPOSITS OF MONETARY MATERIAL

Article 4. (Deposits). Financial Entities may make cash deposits, at the BCB or at Authorized Delegated Administrators. These deposits may be made in national currency and US dollars, in whole packages, and according to the schedules defined by the BCB through its General Management by express circular.

Article 5. (Classification). Banknote packages must be classified by the Financial Entity as fit and unfit. Packages of banknotes containing mixed fit and unfit banknotes will not be accepted. The classification into fit and unfit does not apply to coin packages.

Article 6. (Identification of deposits). I. Banknote packages must carry for their identification bands and tags from the Financial Entity, containing the following information:

1. Name and logo of the Financial Entity.
2. Full name, signature, and seal of the official who formed the package.
3. Place and date of the formation of the package. II. Coin packages must carry for their identification tags from the Financial Entity, with the same information indicated for banknote packages.

Article 7. (Packaging). Banknote packages and coin packages must be packaged in shrink wrap that bears the logo of the Financial Entity. The use of any other tying and packaging material will not be accepted. Financial Entities may use additional security measures, which must be communicated to the BCB.

Article 8. (Deposit of coins). The BCB will accept the deposit of coins when it does not affect the availability of the respective denomination in circulation. The BCB through the GOM will regularly communicate to Financial Entities the coin denominations that can be accepted as deposit.

Article 9. (Receipt and registration). Deposits will be received in the security environments of the BCB Treasury Sub-Management, where compliance with the requirements determined in this regulation, as well as others that may be defined by the BCB General Management by express Circular, will be verified. Once verified, reviewed, and registered in the accounting system, the deposit will be transferred by authorized BCB personnel to the central vault for safeguarding in security drawers classified by Financial Entity, which must sign the deposit receipt issued by the Treasury Sub-Management as a sign of acceptance and agreement.

Article 10. (Security). The deposit and withdrawal of monetary material must be carried out by the Financial Entity using armored vehicles.

SECOND SECTION COUNTING AND VERIFICATION OF DEPOSITED MONETARY MATERIAL

Article 11 (Verification and counting). Banknote packages classified as unfit in national currency will be verified by the BCB, or by the company it determines, in the presence of auditors from the Financial Entity, according to a schedule determined by the Treasury Sub-Management and communicated to the Financial Entity at least 3 business days in advance.

The BCB may determine the verification and counting of packages classified as fit, applying the same procedure established in the preceding paragraph. If fit or unfit banknotes are found in packages deposited as unfit or fit respectively, the BCB will apply a fine for each package with five or more banknotes incorrectly classified as determined in the BCB Fine Table.

Article 12. (Surpluses and shortages in counting). If surpluses or shortages are established in the counting of monetary material, charges and credits will be made in the current and reserve accounts of the corresponding Financial Entity, within a maximum period of 24 hours from the establishment of the differences.

Article 13 (Registration). The registration of monetary material in the BCB Treasury Sub-Management will be carried out by sites, and each site will generate daily reports of its holdings.

THIRD SECTION WITHDRAWAL OF MONETARY MATERIAL

Article 14. (Structure by denominations). The BCB, through the GOM, will define the structure of denominations to attend the withdrawal of cash by entities. The GOM may define predefined matrices of structure by denominations, which will be authorized by the BCB General Management. In all cases, withdrawals can only be made for whole packages.

Article 15. (Delivery priority). The monetary material delivered will be preferably that deposited by the same Financial Entity. If there are no packages from the same Financial Entity in the requested denomination, the Treasury Sub-Management will deliver packages deposited by another Financial Entity or belonging to the BCB. The Financial Entity making the withdrawal may request the counting of the packages. If the packages were deposited by another Financial Entity, the Treasury Sub-Management will summon auditors from the Financial Entity listed on the tags to validate the count carried out by the Financial Entity requesting the withdrawal.

Article 16. (Withdrawal in Delegated Administration). Financial Entities may make withdrawals of monetary material in national currency from the Delegated Administrators determined by the BCB, under the conditions defined in the Delegated Administration Contract and the Operational Procedures Guide for National Currency Treasury Services.

Article 17 (Collection of funds in custody and remittances). The BCB may, at any time, collect remittances of monetary material in national currency from the funds in custody of the Delegated Administrators. At the request of Financial Entities, the GOM may authorize the sending of remittances of monetary material in national currency within the country, charged to the current and reserve accounts of the requesting Financial Entity.

Article 18. (Disposition of monetary material in dollars). Packages in US dollars may be sent by the BCB in remittances abroad for deposit in their accounts.

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CHAPTER III PROCEDURE FOR THE RECEIPT OR RETURN OF SECURITIES IN CUSTODY

Article 19. (Securities subject to Deposit in Custody). The following assets are subject to Deposit in Custody, according to the type of Requesting Agent:

Requesting Agent Asset subject to Custody at the BCB Financial Entity Financial Securities. Public Entity Financial Securities, Seizures, Presidential Medal and Vicepresidential Medal. Exceptionally, other Documents and Historical Objects, prior to the issuance of an express Supreme Resolution. GOM Numismatic Securities. Other BCB Areas Financial Securities, Documents and Historical Objects.

The procedures defined in this Regulation will not apply to gold and silver commemorative coins and medals intended for public sale, which will be administered according to procedures determined by General Management Circular.

Article 20. (Request). The Requesting Agent must accredit its authorized signatories in the manner established in Article 3, numeral 5 of this Regulation. At the same time, it will present a written request to the BCB, which will contain at least the following information: a) Identification of the Requesting Agent. b) Description of the securities to be custodied or withdrawn. c) Names, positions, identity card numbers, and authorized signatures of its representatives, including “when applicable” the identification of the Notary of Public Faith who will prepare the Notarized Act of Deposit or Withdrawal, as determined in Article 25 of this Regulation. d) In the case of deposit, the dimensions of the value to be custodied, including the container, as well as the time of the deposit, which may be indeterminate. e) In the case of withdrawal, the code of the Deposit Act.

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Article 21. (Programming of the operation). After the request is accepted, the BCB through the GOM will define and communicate to the Requesting Agent the hour and date for the receipt or withdrawal of the Securities in Custody and will designate the personnel of the Treasury Sub-Management that will participate in the operation, among which must necessarily be the Sub-Manager or the Department Head.

Article 22. (Operation). On the agreed date and time, the Treasury Sub-Management will verify the following requirements: a) The correspondence of the values with the declaration made by the Requesting Agent. In the case of withdrawal, correspondence with the data registered in the Deposit Act must additionally be verified. b) In the case of deposit, the state of the Value to be custodied as well as its container, so that its custody does not represent a risk to the BCB environments or personnel. c) The correct identification of the Requesting Agent's representatives, including, “when applicable”, the Notary of Public Faith mentioned in Article 20, subsection c) of this Regulation. If any of the requirements are not met, the Treasury Sub-Management will suspend the process of receipt or withdrawal of the Securities in Custody.

Article 23. (Sealed containers). Unless it concerns Financial Securities, the Requesting Agent may make the deposit of Securities in Custody in sealed containers. In this case, the Treasury Sub-Management will not verify the content, taking care however that the container is in perfect condition of conservation at the time of its deposit.

Article 24. (Deposit or Withdrawal Act). Once the requirements are met, the attendees will sign a Deposit or Withdrawal Act, as appropriate, prepared by the Treasury Sub-Management, which will include at least the following information: a) Date and time of 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 Treasury Sub-Management will deliver a copy of the Deposit or Withdrawal Act to the Requesting Agent.

Article 25. (Notarized Acts). The Requesting Agent may raise, under its responsibility and cost, Notarized Acts of the Deposit and/or Withdrawal of the Security in Custody, prior to communication of this determination to the GOM.

Article 26. (Physical Custody). The GOM through the Treasury Sub-Management, in application of its internal procedures, will carry out the deposit and withdrawal of the Securities in Custody in the BCB security areas. Under no circumstances will the Requesting Agent's representatives enter the BCB security areas.

Article 27. (Registration). The GOM through the Treasury Sub-Management will carry out the registration of the Securities in Custody in the Securities in Custody System (SIVAC).

Article 28. (Commissions and Interests). The BCB will not charge commissions nor pay interest for the receipt of Securities in Custody.

Article 29. (Force majeure and fortuitous events). In cases of force majeure or fortuitous events, the BCB will not have the obligation to return or compensate the Security in Custody.

TRANSITORY PROVISION

Unique Article. (Evaluation of Securities in Custody). Within a period of 6 months from the approval of this Regulation, the GOM through the Treasury Sub-Management must carry out an evaluation of the Securities in Custody currently deposited at the BCB. The BCB will proceed to the return of the assets or their transfer to other repositories, prior to authorization of the Requesting Agent that made the deposit, according to what is determined by this Regulation, whose custody does not correspond.

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