Банкеръ Weekly

Briefs

BNB CREATED RULES FOR THE MONEY

Old and shabby levs can be replaced by new ones in all bank branches in Bulgaria. The crediting institutions will be obliged to offer this service from March 31, 2006, when Regulation N16 of the Bulgarian National Bank (BNB) on controlling the quality of banknotes and coins and the instructions for its application become valid. At present, there is no administrative act obliging the banks to accept and replace old and shabby Bulgarian banknotes. That is why customers are often unpleasantly surprised when branch officers refuse to serve them and send them to BNB. Banks will not be allowed to refuse this service from March 31 on. According to Hristo Dichovski, head of BNB Issuing Department, Regulation N18 provides two ways for replacement. The first is immediate replacement. It will be carried out in case that the value of the damaged banknotes can be defined at the moment they are shown. However, if the replacement requires the use of specialized means and tools, the method of deferred replacement will be applied. It stipulates that the banknotes be sent to BNB for assessment. In this case the shabby cuts are to be packed in a special envelope and sent to the central bank which within 30 days must analyze them and send their equivalence to their owner. The cost for the analysis of the damaged banknote is to be paid by the owner and automatically deducted from the value he receives as compensation from BNB.
The money BNB pays to the owners of damaged levs
directly or through the banks depends on the extent of damage of the unfit banknotes. If three quarters of the area of the returned cut is saved or if over 75% of the cut can be recovered from the parts, the owner will be given a brand new cut of the same face value. It means that the replacement will cover the entire value.
If just 50% of the banknote is kept, the bank will pay half of its value. In case of graver damages, the bank will take the money and will not pay anything to the owner.
Damaged coins can be replaced, too, but only if the images on the face and the back are identified.
When one or two damaged banknotes are returned, they will be replaced immediately. In this case the bank officer labels the submitted cut paid by... levs, puts a stamp, writes down the date and puts down his signature. But if a larger quantity is applied for replacement - for example, ten banknotes of BGN50 face value, they will be sent to BNB. The central bank then appoints a special commission to assess their value in accordance with the damages. The commission should announce its opinion within 30 days and its decision is not subject to appeal.
When the notes are more than one hundred, BNB collects a special replacement fee. But if they have been damaged in a theft attempt, they are to be replaced free of charge. However, the customer who brings them is required to present a special document from the Ministry of Interior describing the circumstances of the damage.
Following March 31, 2006
all financial institutions will be obliged to detain cuts
that are suspected counterfeited or unreal. Therefore, people should not be surprised if some of the levs they use to pay with in a bank or an exchange bureau are seized. The new Regulation N18 obliges the officers to keep any note that raises suspicion of counterfeit. In these cases a special protocol is written in two copies. The first one is given to the person whose money is seized and the second accompanies the cuts to the central bank where they become subject to special expertise. The conclusions are written down in a protocol and in case of a demand a copy is sent to the person whose money is seized. However, the person has no chance to appeal against the conclusions of the commission. At first sight, this seems rather logical since BNB is supposed to dispose of the best experts in the country in that field. Still, there is a problem which relates to the postulates of the European Union which Bulgaria is about to join. And they stipulate that no person could be deprived of legal protection against any administrative act. We should not forget that it is because this rule that BNB was forced to remove a regulation from the crediting institutions draft saying that decisions on suspending licences and imposing sanctions on banks are not subject to appeal. Some day the text in Regulation N18 saying that conclusions for a banknote's authenticity cannot be protested in court may be removed, too. Because a decision of the kind injures the person whose money is detained. If he is a criminal who tried to offer counterfeited money on the market, he will hardly appeal against the BNB conclusion. However, if the person has been cheated he should be paid compensation because BGN50 or BGN100 is an amount that many Bulgarians would not easily reject.
Apart from regulating the detaining of counterfeited money and the replacement of damaged banknotes, Regulation N18 also introduces special rights for
using the levs as an advertising tool
As a single institution entitled to issue levs, the central bank is the owner of the copyright. Brochures, papers, magazines, video clips frequently show images of banknotes or coins issued by BNB. According to Regulation N18, a person who wants to use a Bulgarian banknote or coin in advertising materials after March 31, 2006 must submit a special application in BNB. When the applicant is a company, the application is signed by its representative or by someone equipped with a specially certified letter of attorney. A certificate of the company's actual status is to be enclosed (it should not be more than three months old) as well as a certified copy of the letter of attorney. Besides, the company which wants to use levs for advertising or for presentations of its own, must also provide BNB with detailed information about the design of the product, its circulation and production term, about the tools which are to be used for copy of the notes, the place of storage, the method and term for their destruction.
Companies that have copied Bulgarian banknotes and coins by the time Regulation N18 becomes valid and that want to keep doing so must apply in BNB, too. Exceptions of the rules are only allowed if BNB organizes press conferences or presentations on which it shows Bulgarian notes and coins. No application needs to be submitted in case that BNB has authorized or approved the making of a report or other material that shows Bulgarian notes and coins. For example, if the central bank entrusts the preparation of brochures explaining how the real levs look like to foreign tourists, the executor will not be required to file special documents to BNB.
The control over the quality of banknotes and coins
in circulation will become subject to strict rules described in Regulation N18, too. For this purpose the central bank published a Bulgarian Banknotes Fitness Standard and a Bulgarian Exchange Coins Fitness Standard. The unsuitable coins will be selected by sorting machines or specially trained commercial banks officers. From the beginning of 2007, thanks to the ATMs the banks will only pay their customers banknotes that have been checked and classified as real and suitable by sorting machines.
BNB will inspect regularly the machines used by banks and other legal entities that occupy with money processing. Special control will be exercised on the procedures applied by financial institutions in order to find out the authenticity and suitability of the money. In fact, this is the end goal of Regulation N18 - to create clear and accurate rules for operation with banknotes and coins in Bulgaria that will prevent the circulation of damaged money. This is how some day, when Bulgaria becomes a member of the European Monetary Union, the usage of quality euro banknotes will be guaranteed.

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