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Composition of the International

Reserve of the Philippines for
International Payments
The internal Reserve of the Central Bank of the
Philippines may include the following assets:

• GOLD
• Assets in foreign currencies in the form
of: Documents & instruments of types
customarily employed for the international
transfer of fund;
Demand & time deposits in Central Ban,
treasuries, and commercial banks abroad;
Foreign govt. securities, with maturities not
exceeding five years;
Foreign notes and coins
Classification of Monetary Systems
As classified by Exchange Rate Mechanism

1. Fixed rate of exchange monetary

system
 In this system, each country adopts a
certain monetary unit with, more or less,
fixed par value, based generally upon its
gold content. This par value is made the
basis of its exchange rate with other
national standard momentary units, and
this announced exchange rate remains
stable or permanent for some time before it
is officially changed.
Classification of Monetary Systems
As classified by Exchange Rate Mechanism

2. The Floating Rate of Exchange

 A country using the floating rate of
exchange for its monetary allows its money
to be traded in the money market at
exchange rates fixed by the daily forces of
demand and supply for such money. The
monetary unit is allowed to seek its own
price level.
Classification of Monetary Systems
As classified by Exchange Rate Mechanism

3. The Flexible Par Value System

 The middle system between fully fixed
rates of exchange and the free floating rate
of exchange.
Classification of Economic Systems
According to Degree of Management

1. The Free Market Systems

2. The Managed Economic Systems
3. The Planned Economic Systems
4. The mixed Economic Systems
5. The Internationally Managed Systems
Degrees of Management

1. Automatic Management
 Process of management which is closely
guided, or even pre-determined by precise
and detailed rules laid down in advance, to
the effect that when such-and-such a
condition, qualitative, or quantitative, is
fulfilled, countries, (or the Fund) will do
such-and such a course of action.
Degrees of Management

2. Presumptive Management
 Process of management which such
precise and detailed rules will generally
apply, but there is provision of the IMF to
meet, and by an appropriate majority, to
decide to override the rules in particular
cases.
Degrees of Management

3. Discretionary Management
 Process of management which such the
fulfillment of the conditions leads simply to
a consultation and assessment in the IMF,
to be conducted in the light of the principles
involved.
Classification of International Monetary
Systems As to Quality of Internationalism

1. One World Monetary Systems

 Seeks to establish a world monetary system
with international authority in all the main areas
of monetary matters.

2. Bloc Systems
 Allow the information and strengthening of the
one-world approach in the multifarious fields of
trade and money.
 this is also the modern tendency of our times
Gold Exchange Standards in General

Gold Exchange
A system in which a country does not
redeem its money directly in gold, but in
drafts, or claims to foreign exchange,
held in foreign countries under the gold
standard.
A gold fund must be maintained by
government to maintain the gold
exchange standards.
Gold Exchange Standards in General

Three Ways Government to Secure Gold Fund:

1. Borrow in the gold standard country
2. Purchase In its own markets securities of
that country, which it can then sell in the
gold standard country, and deposit the
proceeds in the gold standard country
3. Purchase in its own money markets drafts
drawn upon the gold standard fund arising
out of its own exports
Advantages of the Gold Exchange Standard

1. It is cheaper to operate than the gold

standard.
2. The gold standard fund deposited in the
foreign country earns interest, if it is in the
form of securities payable in gold.
3. It involves no security risks, and expenses
as would be the case when a stock of gold
is held as reserve.
Disadvantage of the Gold Exchange Standard

The chief drawback of the gold

exchange standard is that the value
of the country’s own monetary
standard depends upon the monetary
policies of the gold standard country.
END OF
PART
THREE