Money Supply Introduction

How will money supply changes in the

circulation?
1. Reserve Requirement
- private loaning
2. Discount Rate
- bank loaning
3. Open Market Operation
-government loaning
- buying and selling of bonds
Demand for money
1. Transactional demand- exchange
2. Precautionary demand
3. speculative demand
Supply of money
M1 – currency in circulation (or currency outside
depository corporations) and peso demand deposits.
M2 – M1 plus peso savings and time deposits.
M3 – M2 plus peso deposit substitutes, such as
promissory notes and commercial papers (i.e.,
securities other than shares included in broad
money).
M4 - M3 plus other deposits in foreign currency.
Changing money supply
1. reserve requirement
lending capacity may also affect RR
creation of money
- deposit-loans/ lending

With 100B deposit, how much change in money supply will

possibly occur?
reserve requirement=
required reserve ratio x total deposits
excess reserve =
total reserve - reserve requirement
potential deposit creation =
excess reserve x money multiplier
money multiplier =
1/required reserve
WHAT IS MONEY?
 WHAT ARE THE FUNCTIONS
OF MONEY?

1. Medium of Exchange
2. Unit of Account
3. Store of Value
 THE NEW
GENERATION
PHILIPPINE
BANKNOTES
20 PISO BANKNOTE
Obverse : President Manuel L. Quezon, Malacanan Palace, Seal of the Republic
of the Philippines, New Bsp Seal.
Reverse: - Banaue Rice Terraces, Palm Civet, Weave design from the
Cordilleras
50 PESO BANKNOTE
Obverse: President Sergio Osmena, First National Assembly 1907,
Leyte Landing, Seal of the Republic of the Philippines, and the
New Bsp Seal.
Reverse: Taal Lake, Maliputo, embroidery design handcrafted in
Batangas Province
100 PISO BANKNOTE
Obverse: President Manuel A. Roxas, Central Bank of the Philippines (1949),
Inauguration of the Third Republic(July 4, 1946), Seal of the Republic of the Philippines,
and the New Bsp Seal.

Reverse: Mayon Volcano, Whale Shark, Indigenous textile from the

Bicol Region
200 PISO BANKNOTE
Obverse: Pres. Diosdado P. Macapagal, EDSA people power II, Independence
House, Barasoain Church, Seal of the Republic of the Philippines, New Bsp Seal.

Reverse: Bohol Chocolate Hills, Tarsier, handcrafted design from the Visayas in
Central Philippines.
500 PISO BANKNOTE
Obverse: Icons of Democracy : President Corazon C. Aquino, Senator Benigno
Aquino Jr. EDSA People Power I February 1986, Ninoy Monument, Seal of the
President, New Bsp Seal.

Reverse: Puerto Princesa Subterranean River Nationa Park (UNESCO World

Heritage Site), Blue-naped Parrot, woven cloth from the Southern Philippines.
1000 PISO BANKNOTE
Obverse : War Heroes - Josefa Llanes Escoda, Vicente P. Lim and Jose Abad Santos,
Centennial of Philippine Independence, Medal of Honor, Seal of the Republic of the
Philippines, New Bsp seal.

Reverse: Tubbataha Reefs Natural Park (UNESCO World Heritage Site), South Sea
Pearl, Tinalak or Ikat-dyed abaca woven in Mindanao in Southern Philippines.
SECURITY FEATURES

1. Embossed Prints - raised prints that feel rough to
the touch, i.e. The word "REPUBLIKA NG PILIPINAS"
and "DALAWANG PISO", portrait, signatures, value
panels on the face of the note.
2. Serial Number - composed of 1 or 2 prefix
letters and 6 or 7 asymmetric (increasing in size)
digits located at the lower left and upper right
corners of the face of the note.
3. Security Fibers - red and blue visible
fibers embedded on the paper at random
and glow in 2 colors under ultraviolet light.
4. Watermark - a shadow image of the portrait and the
numeral "20" seen at the blank space of the note when
viewed against the light from either side of the note.
5. See - Trough Mark - word “Pilipino” written
in Baybayin is seen in complete from when the
note is viewed against the light.
6. CONCEALED VALUE – denomination value
superimposed on the smaller version portrait at
the upper left side of the note becomes obvious
when the note is rotated 45 deg & tilted down.
7. SECURITY THREAD - embedded thread
running vertically across the note is visible from
either side of the note when viewed against the
light.
8. OPTICALLY VARIABLE DEVICE – reflective foil that
bears the image of the Blue -naped Parrot & a small BSP
Logo. The color of the parrot changes from red to green
when the note is rotated at 90 degrees.
9. OPTICALLY VARIABLE INK – embossed “1000”
denominational value at the lower right corner
of the face of the note changes color from green
to blue when viewed at different angle.
COMMEMORATIVE
COINS AND BILLS