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The Philippine Financial System: An Overview

The Philippine Financial System: An Overview

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An outlined overview of the Philippine Financial System.
An outlined overview of the Philippine Financial System.

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Published by: Riza Oafericua Ponciano on Jul 24, 2009
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01/02/2013

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 THE PHILIPPNE FINANCIAL SYSTEM THE PHILIPPNE FINANCIAL SYSTEM
THE STRUCTURE OF THE PHILIPPNE FINANCIAL SYSTEM 
FNANCIAL SYSTEM – a network that generates, circulates, and controls money andcredit.SURPLUS INCOME – refers to the excess incomes of an individual.OBRAS PIAS – the first credit institution n the Philippines; started by Fr. JuanFernandez de Leon in 1754 and ended in 1820.BANCO ESPAÑOL – Filipino de Isabella II the First Philippine Bank establish in 1851FIRST AGRICULTURAL BANK OF THE PHILIPPINES – established n 1906 and in 1916 allof its asset and liabilities were transferred to the newly organized PNB.FNANCIAL MARKET – are physical locations or electronic forums that facilitate theflow of funds among nvestors, businesses and governments. It provides themechanism for allocating financial resources of funds from savers toborrowers.ROLES OF THE FNANCIAL MARKET:1.Money market operation2.Expedites the transaction of financial claims3.Serves as a mean of bringing the forces of demand and supply of financialclams4.Facilitates the flow of funds among investors, business, and governments.5.Provides the mechanisms for allocating financial resources or funds fromsavers to borrowers.6.Raises money by selling shares to investors and its existing share can bebought or sold.7.Where lenders and their agents can meet borrowers.8.Convenes many interested sellers n one place.9.Provides the place where many commodities are traded.10.Used to match those who want capital to who have it.11.Facilitates:
 The raising capital in capital markets
 The transfer of risk in the derivatives market
International trade in the currency market1942 – PNB closes its doors because of the coming of the Japanese imperial Forces.Rehabilitation Finance Corporation – formed in 1946 to provide credit facilities forthe rehabilitation of agricultural, commerce and industry reconstruction of war-damaged properties and later become the Development Bank of thePhilippines.Offshore Banking Units – any branch, subsidiary of affiliate of Foreign BankingCorporation that conduct banking transactions in foreign currencies.
 
BANGKO SENTRAL NG PILIPINAS AND ITS ROLE N THE DEPOSIT EXPANSION AND MONEY SUPPLY
CENTRAL BANK – a financial institution vested by the State with the function of regulating the supply, cost and use of money with a view to promotingnational and international economic stability and welfare.DEVELOPMENT OF THE BANGKO SENTRALNG PILIPNAS The central bank of countries within the region of Southeast Asia arecomparatively young having been established mostly only after the end of the Second World War. The Philippines, a young nation, is not an exception. Itestablished its central bank only on January 3, 1949, The concept of a central bank was developed in 1933 by Miguel Cuaderno,the first governor of the Central Bank of the Philippines. The Central Bank of the Philippines was patterned after similar central banks established inParaguay and Guatemala, two countries which, like the Philippnes have thesame export economies. The Central Bank of the Philippines came toexistence as a result of the approval by the former President Elpdio Qurino pf Republic Act No. 265, otherwise known as the “Central Bank Act” on June 15,1948. However, actual operations did not commence until January 3, 1949when the bank open its doors for business in the old Intendencia Buildinglocated at Intramuros, Manila.With the accumulation of losses incurred by the Central Bank, P317B as of December 1992, there emerged the CMA bill to transform the Central Bankinto Central Monetary Authority. This CMA bill is also in response to a call of the International monetary Bank and World Bank to ease the foreign debtburden and strengthen the credit standing of the Philippines. And then whenthe CMA law also known as “The New Central Bank Act” took effect on June14, 1993 there is established an independent Central Monetary Authoritywhich is known as the “Bangko Sentral ng PilipInas” and has a capital of P50billion. THE FUNCTION OF THE BANGKO SENTRAL NG PILIPNAS
Liqudity Management
Currency Issue
Lender of Last Resort
Financial Supervsion
Management of Foreign Currency Reserves
Determination of Exchange Rate Policy
Other Activities (Functions as the banker, financial advisor and officialdepository of the Government)
 
OBJECTIVES OF BSP1.To maintain price stability conducive to a balanced and sustainable growth of the economy2.To promote and maintain monetary stability and convertibility of thePhilippine peso
THE BSP ON MONEY SUPPLY AND DEPOSIT EXPANSION
MONEY SUPPLY – the sum of notes and coins in the circulation and peso demanddepositions subject to withdrawal by checkDEPOSIT EXPANSION – the change in money supply as a result of an increase inbank reserveMONETARY BOARD – policy making body of the BSP; exercise the powers andfunctions of the BSP THE MAIN FUNCTONS OF THE MONETARY BOARD1.Issues rules and regulations it considers necessary for the effective dischargeof the responsibilities and exercise the powers vested upon it.2.Direct the management, operations and administration of the BSP3.Establish a human resource management system4.Adopt an annual budget for and authorize such expenditures by BangkoSentral5.Indemnify uts members and other officials of Bangko Sentral THE BSP MONETARY BOARDChairman: Armando M. Tetangco, Jr.Members: Juanito D. AmatongAlfredo C. AntonioRaul A. BoncanIgnacio R. BunyePeter FavilaNelly F. Villafuerte
 MONETARY POLICY AND ITS OBJECTIVES

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