c a m e t o existence as a result of the approval by the former President Elpidio Quirino of Republic Act
No. 265, otherwise known as the Central Bank Act on June 15,1948. However, actual operations
did not commence until January 3, 1949when the bank open its doors for business in the old
Intendencia Building located at Intramuros, Manila. With the accumulation of losses incurred by
the Central Bank, P317B as of December 1992, there emerged the CMA bill to transform the
Central Bank into Central Monetary Authority. This CMA bill is also in response to a call of the
International monetary Bank and World Bank to ease the foreign debt burden and strengthen the
credit standing of the Philippines. And then when the CMA law also known as The New Central
Bank Act took effect on June14, 1993 there is established an independent Central Monetary
Authority which is known as the Bangko Sentral ng Pilipinas and has a capital of P50billion.
THE FUNCTION OF THE BANGKO SENTRAL NG PILIPNAS
1. Liquidity Management
2. Currency Issue
3. Lender of Last Resort
4. Financial Supervision
5. Management of Foreign Currency Reserves
6. Determination of Exchange Rate Policy
7. Other Activities (Functions as the banker, financial advisor and official depository of the
Government)
OBJECTIVES OF BSP
1. To maintain price stability conducive to a balanced and sustainable growth of the economy
2. To promote and maintain monetary stability and convertibility of the Philippine peso
THE BSP ON MONEY SUPPLY AND DEPOSIT EXPANSION
MONEY SUPPLY the sum of notes and coins in the circulation and peso demand deposits subject to withdrawal
by check
DEPOSIT EXPANSION the change in money supply as a result of an increase in bank reserve
MONETARY BOARD policy making body of the BSP; exercise the powers and functions of the BSP
THE MAIN FUNCTONS OF THE MONETARY BOARD
1. Issues rules and regulations it considers necessary for the effective discharge of the
responsibilities and exercise the powers vested upon it.
2. Direct the management, operations and administration of the BSP
3. Establish a human resource management system
4. Adopt an annual budget for and authorize such expenditures by Bangko Sentral
5. Indemnify its members and other officials of Bangko Sentral
THE BSP MONETARY BOARD
Chairman: Armando M. Tetangco, Jr.Members: Juanito D. AmatongAlfredo C. AntonioRaul A. BoncanIgnacio R.
BunyePeter FavilaNelly F. Villafuerte
MONETARY POLICY AND ITS OBJECTIVES
MONETARY POLICY the management of the expansion and contraction of the volume of money in circulation
for the explicit purpose for attaining a specific objective
CENTRAL BANK OF THE PHILIPPINES responsible for executing the monetary policy; gives
primary and immediate importance to the maintenance of monetary stability
CONFIDENCE OF MONEY basis for all economic activities in a society based uponcredit
ADVANTAGES
1.Impersonal
2. Fl e xi b l e i n op e r a t i on
3. Operates for the most part free from the weight of political pressures
DISADVANTAGES
1. Attempts to change available money supply through the banking system
2. Results to high-priced goods and services
QUANTITATIVE AND SELECTIVE INSTRUMENTS
1. QUANTITATIVE (Open Market Operations) used to regulate total quality of money available for all
purposes
2. SELECTIVE
employed to limit the amount of money available for certain specific purposes
RELATION OF INTEREST RATES TO SAVINGS AND INVESTMENTINVESTMENT induce a significant
increase when the depressions of driving interest rates down
SAVINGS it is contended when there is an increase in interest rate
TIGHT MONEY POLICY AND EASY MONEY POLICY TIGHT MONEY SUPPLY contraction of money
supply
EASY MONEY POLICY expansion of money supply
FINANCIAL STABILITY SSUES AND CHALLENGES
KEY FACTORS THAT AFFECTS THE FINANCIAL SYSTEM:
1. Fi na n c i a l Re s o ur c e s
2.Banking System
3. Non-Bank Financial institution
ISSUES ARISING
1. Fi na n c i a l St a bi l i t y
2. I nt e gr a t e d Re gu l a t o r ( s )
3. Financial Transparency
4. Deregulation of Financial Market
5. Rapid Financial Innovation
6. Sp a c e Ag e Tec h nol og y
CHALLENGES ENCOUNTERED
1. I mp r o vi ng As s e t Qu a l i t y
2. M a n a gi ng Ri s k Ex po s ur e
3. Developing the Domestic Capital Market