FIMA

• A group of Filipinos had conceptualized a central bank for the Philippines
• Philippine is 100 years delayed compared to progressive countries. But still, BSP is one of the best managed central bank in the world
• Hare-hawes cutting bill


  1. Approval of the Philippine Independence bill

  2. Made a road to the Philippine to carefully study the economy resulting to the establishment of the Central Bank
• The discussion of BSP continued

  Commonwealth Period (1935-1941)
• Price Stability


  There is no abrupt increase and decrease (increase should still something affordable to general public)
• Economic Growth


  Through employment, inflation, level of education and performance, exports, foreign exchange etc.
• The Philippine was on the exchange standard using the US Dollar - which was backed up 100 percent gold reserve – as the standard currency
• 1939


  1. The Philippine legislature passed a law establishing central bank as required by the Tydings-Mcduffie Act

  2. As it was a monetary law, it required the approval of the United State president and President Franklin D. Roosevelt disapproved due to strong opposition from vested interest
• 1944


  1. A second law was passed during Japanese Occupation

  2. However, the arrival of the American liberalization forces aborted its implementation
• 1946


  1. President Manuel Roxas assumed office

  2. He instructed Secretary Miguel Cuaderno Sr. to draw up a charter for a central bank
• Charter for a Central Bank (blueprint)

  What are the needs for a central to organize
• Joint Philippine-American Finance Commission chaired by Mr. Cuaderno


  As a result of the findings, the establishment of a monetary authority became imperative year later
• 1947


  1. The Commission studied Philippine financial, monetary and fiscal problems

  2. Which then recommended a shift the dollar exchange standard to a managed currency system

  3. A central bank was necessary to implement the proposed shift to the new system
• 1948


  1. The central bank council submitted the charter to congress in Feb 1948

  2. Newly-proclaimed president Elpido Quirino affixed his signature on Republic Act No. 265, the Central Bank Act of 1948
• The establishment of the central bank of the Philippines was definite step toward national sovereignty
• Over the years, changes were introduced to make the charter more responsive to the needs of the economy
• 1972


  1. Presidential Decree No. 72 adopted the recommendations of the Joint IMF-CB which made a study of the Philippine Banking System

  2. Proposed a program designed to ensure the system's soundness and healthy growth
• The most important recommendations were related to the objectives of the Central Bank, its policy-making structures, scope of its authority and procedures for dealing with problem financial institutions
• 1973


  1973 Constitution mandated the national assembly to establish an independent central monetary authority
• Independent Monetary Authority


  The decision making of that institution is independent of any institutions, That's how, the policy will work and be implemented properly
• 1987 Constitution


  1. Adopted the provisions on the CMA from the 1973 constitution

  2. Aimed essentially at establishing an independent monetary authority through increased capitalization and greater private sector representation in the Monetary Board
• 1993


  1. President Fidel V. Ramos signed into law Republic Act No. 7653, the New Central Bank Act on June 14, 1993

  2. The law provides for the establishment of an independent monetary authority to be known as the Bangko Sentral ng Pilipinas

  3. Price Stability explicitly stated as its primary objective that was implied in the old Central Bank Charter

  4. The law also gives the Bangko Sentral fiscal and administrative autonomy which the old central bank did not have
• July 3, 1993, the new central bank act took effect
• Managed Currency System


  Value depends on Supply and Demand
• Primary objectives of Bangko Sentral ng Pilipinas

  • To maintain price stability conducive to a balanced and sustainable economic growth
  • To promote and preserve monetary stability and the convertibility of the national currency
• Responsibilities of Bangko Sentral ng Pilipinas


  • Provides policy directions in the areas of money, banking and credit
  • Supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions
• Liquidity Management


  BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability
• Monetary Policy


  Inflationary (inflation) and Non-Inflationary (deflation)
• Currency Issue


  • BSP has the exclusive power to issue the national currency
  • All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts
• Lender of last resort

  BSP extends discounts, loans and advances to banking institutions for liquidity purposes
• Financial Supervision


  BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions
• Management of foreign currency reserves

  BSP seeks to maintain sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso
• Determination of exchange rate policy

  BSP determines the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy such that the role of Bangko Sentral is principally to ensure orderly conditions in the market
• Other activities of Bangko Sentral ng Pilipinas

  • Banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations
• Monetary Board


  Where the powers and function of Bangko Sentral are exercised, which has seven members appointed by the President of the Philippines
• Requirements for Monetary Board members under the New Central Bank Act

  • One of the government sector members must also be a member of the Cabinet designated by the President
  • Certain qualifications are established for the members
  • Members are prohibited from holding certain positions with other governmental agencies and private institutions that may give rise to conflicts of interest
  • Aside from the Cabinet, the Governor and the other members serve terms of six years and may only be removed for cause
• Authorities of the Monetary Board

  • Issue rules and Regulation
  • Direct the management, operations, and administration of the Bangko Sentral
  • Establish a human resource management system
  • On the recommendation of the Governor, appoint, fix the remunerations and other emoluments, and remove personnel of the Bangko Sentral
  • Adopt an annual budget for and authorize such expenditures by the Bangko Sentral
  • Indemnify its members and other officials of the Bangko Sentral
• Governor


  Chief executive officer of the BSP and is required to direct and supervise the operations and internal administration of the BSP
• Senior assistant governors heading BSP's operating sectors

  • Monetary and Economics Sector
  • Financial Supervision Sector
  • Currency Management Sector
  • Corporate Services Sector
• Responsibilities of the Governor

  • Prepare the agenda for the meetings of the Monetary Board
  • Execute and administer the policies and measures approved by the Monetary Board
  • Direct and supervise the operations and internal administration of the Bangko Sentral
  • Appoint and fix