The central bank maintains monetary stability to promote economic growth.
In 1945, it became known as the Central Bank of the Philippines under Republic Act No. 26.
In 1905, it became known as the Philippine National Bank (PNB).
It supervises and regulates the banking system to ensure a stable financial system and protect the financial interests of citizens.
It was established on June 17, 1902 as the National Bank of the Philippine Islands (NBPI) by Act No. 348.
The BSP is the central bank of the Philippines.
It issues currency and maintains adequate foreign exchange reserves.
It is the primary institution responsible for implementing monetary policy, regulating financial institutions, managing public debt, and promoting payment systems.
The BSP has three main functions: (1) maintaining price stability through monetary policy, (2) ensuring financial system stability, and (3) acting as fiscal agent and advisor to government on economic matters.
Monetary Policy - The process by which the central bank adjusts interest rates or other tools to influence inflation and stabilize prices.
It ensures the integrity and security of the country's currency through its issuance and management.
The BSP is responsible for maintaining price stability through its monetary policy framework.
The BSP has been granted independence from political interference since 1993.
The BSP's primary objective is to maintain price stability, which means keeping inflation at low levels over time.
The Philippines financial system refers to the network of institutions, markets, and intermediaries that facilitate the flow of funds and financial transactions within the country
Key components of the Philippine financial system include:
CommercialBanks
Universal Banks
Thrift Banks
Rural Banks and Cooperative Banks
NBFIs
Stock Exchange
Bond Market
Microfinance Institutions
Electronic Payment Systems
Regulatory Bodies
Financial System Participants:
Households or consumers
Financial institutions/intermediaries
Non-financial institutions
Government
BSP
Foreign participants
The Philippine financial intermediation sector is primarily composed of banks and non-bank financial institutions
The Role of Financial Intermediaries:
Mobilizing savings
Allocating funds to various sectors and industries in the economy
Providing credit to borrowers in various forms, such as loans, mortgages, and credit cards
Diversifying and managing risk
Facilitating the smooth flow of transactions by providing a variety of financial services
Providing information and advice to individuals and businesses
Providing liquidity to individuals and businesses
Classroom activity on financial intermediaries:
Divide the class into 4 groups and assign each group a different type of financial intermediary, such as a bank, credit union, insurance company, or investment firm
Each group should research their assigned financial intermediary and prepare a short presentation about its role in the financial system, its activities, and how it benefits consumers and businesses
Low Inflation - An annual rate of change in the average price level that does not significantly affect people's purchasing power.
The Deputy Governors are elected by the Monetary Board and serve as Vice Chairmen of the board.
Price Stability - A state where there are no significant fluctuations in the level of consumer prices.
Inflation refers to the general increase in the prices of goods and services in an economy.
Target Range - Refers to the upper and lower limits set by the BSP for the inflation rate.
Inflation Rate - Measures changes in the general level of prices of goods and services purchased by households.
Price Stability - Achieving an average annual inflation rate within the target range of 2-4% over the medium term.
Advisor to Government - It provides advice to the government on various aspects of macroeconomic policies.
Fiscal Agent - It manages the national government's borrowings from both domestic and international sources.
Financial System Stability - It promotes soundness and safety of banks and non-banking financial intermediaries, including insurance companies and investment houses.
Inflation Targeting Framework - A framework used by many central banks around the world, whereby they set an explicit target for inflation and use various instruments to achieve it.
Fiscal Agent and Advisor - Managing the government's finances, including issuing bonds and advising on tax policies.
Financial System Stability - Ensuring that banks are sound and solvent, preventing runs on banks, and protecting depositors' funds.
The BSP's headquarters are located at Ayala Avenue corner Makati Avenue, Makati City.
On August 1, 1993, it changed its name again to Bangko Sentral ng Pilipinas (BSP), which means "Central Bank of the Philippines" in Filipino.
In 1965, it became known as the Central Bank of the Republic of the Philippines (CBRP).
Regulator - It regulates banks, non-bank financial institutions (NBFIs), payment systems, and other related entities.
Payment Systems Oversight - It ensures that payment systems are safe, efficient, reliable, and accessible to all users.
Mandate - The legal authority given to the BSP to pursue specific goals related to price stability, financial system stability, and economic growth.
Central Bank - Responsible for implementing monetary policy and regulating commercial banking operations.