Bangko Central ng Pilipinas

• 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:

  • Commercial Banks
  • 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.