Banknotes and CoinsSeptember 2012
Under what authority does the Bangko Sentral ng Pilipinas (BSP) issue currency?
Pursuant to Sec. 50, R.A. 7653, the BSP shall have the sole power and authority toissue currency within the territory of the Philippines.
What does it issue?
The BSP issues notes and coins for circulation in the Philippines. It also issues legaltender commemorative notes and coins.
How is currency issued to the public?
Security Plant Complex (SPC) delivers New BSP banknotes and coins to theCurrency Issue and Retirement Office (CIRO) for issuance to Cash Department(CD) and Regional Monetary Affairs Sub-Sector (RMASS). CD services withdrawalsof notes and coins of banks in Metro Manila; RMASS takes charge of banks in theregions through its 21 Regional Offices/Branches. Currency, notes and coins areeventually issued to the public, when as depositors/clients, the public withdraw theirdeposits from banks.
How does the BSP determine the volume/value of notes and coins to be issued annually?
The annual volume/value of currency to be issued is projected by forecasting thecurrency demand for fresh notes and coins using the linear regression forecastingmethod. This, in turn, is determined by the following variables, a) the currencyrequirement of the economy to support growth, b) inflation rate, c) the rate by whichcurrency are replaced/retired in line with the BSP’s Clean Note policy and otherconsiderations, and d) the existing inventory of notes and coins with the BSP. Thefirst two factors, are in turn based on the macro models while the third factor isbased on the historical data of demand deposits and withdrawals, as well ascurrency retirement. The denominational breakdown is derived using historical dataof demand deposit withdrawals of banks, deposits, and the replacement rate ofcurrency notes, disaggregated by denomination, as well as results of the survey onbanks’ currency needs by denomination. A Currency Management Committeeoversees the forecasting model for currency demand to ensure that currency issue isconsistent with monetary policy and adequate to meet the demand for notes andcoins.
Is there a limit to the amount of notes and coins that the BSP may issue?
The total amount of banknotes and coins that the BSP may issue shall not exceedthe total assets of the BSP.