Monetary Policy is Monetary Policy

• Barter system


  Act of trading goods or services for another without using a medium of exchange such as money
• Disadvantages of barter system


  • Lack of double coincidence of wants
  • Difficult to transport
  • Difficult to compute profit
• Commodity Money


  Using items as a medium of exchange made it easier to transact business
• Commodity Money


  Consists of objects having value or use in themselves as well as their value in buying goods
• Precious metals


  Gold, silver, copper
• Precious metals


  Money was valued according to weight and calibre of the metal
• Precious metals


  Difficult to transport because of weight
• Paper Money


  Used when there were not enough coins to make payments
• Money


  Anything that serves as a medium of exchange
• Money


  Intangible concept
• Forms of Money


  • Commodity Money
  • Token Money
  • Fiduciary Money
  • Fiat money
• Commodity Money


  After using rice, corn, leather or salt people moved to using precious metals such as gold silver and copper which we more durable and did not perish over time
• Token Money

  Form of money in which the value of the metal is less than the value imprinted on it
• Unfair value of Token Money

  To avoid hoarding the token money
• Fiduciary Money


  Not accepted as legal tender by the government
• Fiduciary Money


  • Gift cards and coupons
• Fiduciary Money


  Kasunduan basically
• Fiat money


  Paper money/fiat money
• Fiat money


  Money that has no intrinsic value but it can be used for transactions because the government says so
• Fiat money


  Recognized by the law
• Functions of money

  • Medium of Exchange
  • Unit of account
  • Standard of deferred payment
  • Store of Value
• Medium of Exchange


  Certain that money is accepted in transactions which would allow people to get goods and services
• Unit of account


  Money is used as a common yardstick or a common denominator in measuring the value of all goods and services produced in the economy
• Unit of account


  They add worth to the items
• Standard of deferred payment


  Can be used to pay for future commitments
• Store of Value


  Money retains its value over time
• Medium Exchange


  Anything that is widely accepted as means of payment
• Legal tender (national currency)


  Bangko Sentral ng Pilipinas (BSP)
• Bangko Sentral ng Pilipinas (BSP) is the central bank of the Philippines
• BSP was founded


  July 3, 1993
• Functions of BSP


  • Influence Money Supply
  • Printing of money
  • Economic Stabilization
  • Regulate Financial Institutions
• Influence Money Supply


  Influences the supply of money through loans and interest rates
• Printing of money


  Only the BSP has the authorization and power to print bills and coins
• Economic Stabilization


  Maintain stable prices and to safeguard the stability of the financial system
• Regulate Financial Institutions


  Regulates all the financial institutions in the country
• BSP was established


  July 3 1993
• Eli Remolona Jr.


  Present Governor of Bangko Sentral
• Contractionary Monetary Policy


  Involves the reduction of monetary supply
• Expasionary Monetary Policy 


  policy that involves the increase in the money supply
• reserve requirement ratio 


  reserves are a commercial bank's cash holding physically held by the bank

  
  

  must be followed by banks