Central Bank and the BSP

Central Bank
A Central Bank is the bank in any to which
has been entrusted by law the duty of
regulating the volume of currency and credit
in the country.
Characteristics of a Central Bank
Publicly-owned
Bank of currency issues and ultimate source
of money
Bankers Bank
Custodian of the countrys reserves of foreign
currencies
Regulation of monetary and financial
activities
Characteristics of Central Banks
Publicly-owned
Central bank does not deal in the business of general
banking. It deals only with the government or its political
sub-divisions, and with other banks.

BSP as the central bank of the country is fully owned
and controlled by the government .

The older central banks are evolved private institutions,
which either developed into publicly controlled banks or
have retained there private character.

Characteristics of Central Banks
Examples of Publicy-owned central banks
Belgium
Switzerland
Japan

*The Bank of England evolved from a private
profit-oriented bank.
Characteristics of Central Banks
Bank of currency issues and ultimate source
of money
All central banks perform the note issue
function for the country.
The notes are regulated in their supply by the
government
Monetary authority
The requirements of the budget

*The Central Bank can provide the all the money the
government requires
Characteristics of Central Banks
Bank of currency issues and ultimate source
of money
The Philippine central Bank
Prints and mints coinage
Ultimate provider of cash

The general public will accept such checks
because the commercial banks will credit the
proceeds to the depositors account.
Characteristics of Central Banks
Bankers Bank
The old central banks evolved partly from the
need for some institutions to become a bank
for bankers.
All central banks perform this function of
servicing other banks.

Maintaining accounts for other commercial banks

Characteristics of Central Banks
Custodian of the countrys reserves of foreign
currencies.

central banks naturally serve as the keeper of
the countrys reserve as the keeper of the
countrys reserve of international currencies
The function of being custodian of international
reserves evolved from the note issue function and
that of keeping the reserves of other banks
Characteristics of Central Banks
Custodian of the countrys reserves of foreign
currencies.

The central bank kept the metallic reserves in
order to meet the possibility of converting paper
notes into metallic equivalent on demand.

The metallic currency holdings served also as a
reserve
Characteristics of Central Banks
Custodian of the countrys reserves of foreign
currencies.
A central bank may not be hampered by lack
of cash since it can always issue new money

The resident of another country require
another currency acceptable to them.
Characteristics of Central Banks
Custodian of the countrys reserves of foreign
currencies
In the Philippines
Reserves are traditionally held in U.S. dollars
Euro
Swiss francs
Japanese yen
British pound (has found its level among the major
currencies)
Characteristics of Central Banks
Custodian of the countrys reserves of foreign
currencies

Restrictions on foreign exchange payment
have some time been exercised by central
banks.
To conserve the foreign reserves, the central bank
normally keeps this foreign exchange in other banks
abroad, normally earning interest.
Characteristics of Central Banks
Regulations of monetary and financial
activities.
Most central banks are given the authority to
regulate the operations of all banks and other
financial institutions in the Supervision of
banks
Other financial institutions
country.
Characteristics of Central Banks Regulations of monetary and financial activities.


The regulation of the condition for the
establishment of new banks
The prescription of qualifications for banks
officers and directors
The determination of the activities they can
engage in
The conditions for deposit taking and loan-giving
Prime Function of Central Bank
It operates to control the economys
supply of money and credit.
The Bangko Sentral
Pilipinas
Central bank of the Republic of the
Philippines.

Established on 3 July 1993.

Has a capital of 50 billion pesos.

the only authorized government
entity to print money.
The BSP Seal
Principal Elements:

1. The Philippine Eagle, our national
bird, is the worlds largest eagle and
is a symbol of strength, clear vision
and freedom, the qualities we aspire
for as a central bank.

2. The three stars represent the three
pillars of central banking: price
stability, stable banking system, and
a safe and reliable payments
system. It may also be interpreted
as a geographical representation of
BSPs equal concern for the impact
of its policies and programs on all
Filipinos, whether they are in Luzon,
Visayas or Mindanao.
The BSP Vision and Mission
Vision
The BSP aims to be a world-class monetary authority and a
catalyst for a globally competitive economy and financial
system that delivers a high quality of life for all Filipinos.

Mission
BSP is committed to promote and maintain price stability
and provide proactive leadership in bringing about a strong
financial system conducive to a balanced and sustainable
growth of the economy. Towards this end, it shall conduct
sound monetary policy and effective supervision over
financial institutions under its jurisdiction.

Objectives
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
The BSP provides policy directions in the
areas of money, banking and credit. It
supervises operations of banks and exercises
regulatory powers over non-bank financial
institutions with quasi-banking functions.

BSPs function Under RA 7653
Liquidity Management
The BSP formulates and implements monetary
policy aimed at influencing money supply
consistent with its primary objective to maintain
price stability.
Currency Issue
The 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
The BSP extends discounts, loans and advances
to banking institutions for liquidity purposes.
Financial Supervision
The BSP supervises banks and exercises
regulatory powers over non-bank institutions
performing quasi-banking functions.
Management of foreign currency reserves.
The 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.
The 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
The BSP functions as the banker, financial advisor and
official depository of the Government, its political
subdivisions and instrumentalities and government-
owned and -controlled corporations.

The BSP Security Plant Complex
The Security Plant Complex which is located in Quezon City
houses a banknote printing plant, a securities printing plant, a
mint and a gold refinery. The banknote printing plant and the
mint take care of producing currency notes and coins,
respectively.

BSP's Organizational
Structure
The Executive Management Services
Terms Started Term Finished Name
1949
1961
1960
1967
Miguel Cuaderno, Sr.
Andres V. Castillo
1968 1970 Alfonso Calalang
1970 1981 Gregorio S. Licaros
1981 1984 Jaime C. Laya
1984 1990 Jose B. Fernandez, Jr.
1990 1993 Jose L. Cuisa, Jr.
Governors of the Central Bank
Terms Started Term Finished Name
1993
1999
1999
2005
Gabriel C. Singson
Rafael B. Buenaventura
2005 Present Amando M. Tetangco Jr.
Governors of the Banko Sentral
The monetary board
MB exercises the power and functions of the
BSP, such as the conduct of monetary policy
and supervision of the financial system.

Members of the monetary board are
appointed by the President.
Members of MB
Governor
Chief Executive officer of the BSP.
Shall be subject to the confirmation of the
Commission of Appointments.
empowered to sign notes and securities
issued by the BSP.
Members of MB
A member of the Cabinet to be designated by
the by the President.

Five members who shall come from the
private sector.
The BSP Monetary Board
Chairman Amando M. Tetangco, Jr.

Members Cesar V. Purisima

Alfredo C. Antonio
Ignacio R. Bunye
Peter B. Favila
Felipe M. Medalla
Armando L. Suratos
The Monetary Stability Sector
Monetary Stability Sector
Takes charge of the formulation and
implementation of the BSPs monetary policy
The Supervision and Examination Sector
The Supervision and Examination Sector
Enforces and monitors compliance to banking
laws to promote a sound and healthy banking
system.
The Resource Management
Sector
The Resource Management
Sector
Serves the human, financial and physical
resource needs of the BSP.
Advocacies of the BSP
Microfinance
The BSP has declared microfinance as its
flagship program for poverty alleviation in Year
2000 and has since then played a key role in
the development of sustainable microfinance
in the country. The BSP initiatives have
focused on the policy and regulatory
environment, training and capacity building as
well as on promotion and advocacy.

The BSP has been proactive in the
development of microfinance using a three
pronged approach:
I) To provide the enabling policy and
regulatory environment,
II) To increase the capacity of the BSP and
banking sector on microfinance operations,
and
III) To promote and advocate for the
development of sound and sustainable
microfinance operations.

Anti-Money Laundering
In order to implement its continued
commitment and support of the global fight
against money laundering, the BSP worked
for the passage of the Anti-Money Laundering
Act and issued a number of measures to
bring the Philippines' regulatory regime on
money laundering closer to international
standards.
Anti-Money Laundering Act (AMLA) of
2001 (Republic Act No. 9160)
Law which prescribed penalties for such crimes
committed and formed the foundation of a central
monitoring and implementing council called anti-
money laundering council.
this law imposes requirements on customer
identification, record keeping, reporting of covered
and suspicious transactions, relaxes strict bank
deposit secrecy laws, and provides for
freezing/seizure/forfeiture/recovery of dirty
money/property as well as for international
cooperation.

AMLA Amendments (RA 9194)
To address concerns such as the high threshold
level for covered transactions, the coverage of
covered institutions and the existing Bank Secrecy
Law, the amendments to the AMLA were signed into
law on 7 March 2003 under Republic Act No. 9194.
The amendments included the following:
a) lowering the threshold for covered transactions from
P4.0 million to P500,000;
b) authorizing the BSP to inquire or examine any deposit
or investment with any banking institution without court
order in the course of a periodic or special examination;
and
c) removing the provision prohibiting the retroactivity of
the law.

AMLA Amendment under RA 10167
Section 10 relates to the Freezing of Monetary
Instrument

Section 11 relates to the Authority to Inquire
into Bank Deposits wherein the AMLC is given
authority to examine bank accounts upon order
of any competent court based on an ex parte
application which effectively expanded the
instances when no such court application is
required.
AMLA Amendment under RA 10365
Expansion of the definition of the crime of money
laundering: AMLC can now go after persons who
engage in the conversion, transfer, movement,
disposal of, possession, use, and concealment or
disguise, of the monetary proceeds of an unlawful
activity, that was previously limited to the transaction
of laundered funds and property;
Inclusion of jewelry dealers in precious metals and
stones whose transactions are in excess of
P1,000,000 and company service providers as
defined and listed under RA 10365, are now
included as Covered Persons;

Increase of unlawful activities to money laundering
from 14 to 34. The 20 additional crimes include
trafficking in persons, bribery, counterfeiting, fraud
and other illegal exactions, forgery, malversation,
various environmental crimes, and terrorism and its
financing;
Authorize the AMLC to require the Land Registration
Authority and all its Register of Deeds to submit
report to the AMLC covering real estate transactions
in excess of P500,000.00;
Issuance of freeze order by the Court is now valid
for a maximum period of six (6) months, from the
previous twenty (20) days validity under RA 10167
Financial Literacy
The BSP has taken a proactive stance in embarking on a
consumer education program that aims to improve the basic
financial literacy of the public. In line with this program, the BSP
approved in January 2004 the creation of the BSP Consumer
Education Committee. The Committee initially addressed the
basic financial literacy needs of consumers of financial products
and services. This involved familiarizing the public on the various
banking products and services that they usually encounter in
ordinary financial transactions.
Moreover, the BSP promoted consumer rights awareness and
protection through its linkage with an inter-agency group,
ConsumerNet. ConsumerNet is a group of national government
agencies that have banded together to facilitate the resolution of
consumer complaints and disseminate information regarding
consumer rights.

References:
www.bsp.gov.ph
Pagoso (2009). Money, Credit and Banking
Members:
Afurong, Jemilu

Banate, Marvin

Ignacio, Nicole

Villena, Flor Jen