Senior High School Manila Science High School

ECONOMICAL DECLINE: NEW GENERATION

CURRENCY, GRADUAL CHANGE OF THE

PHILIPPINE COIN POOL 2018-2019

An IMRAD Thesis Proposal

Presented to

Manila Science High School

Ermita, Manila

In Partial Fulfilment

Of the Requirements for the

RESEARCH PROJECT

RESEARCH PROPONENTS

12-Thomson

John Ethan J. Dela Cruz

September 2019
 Senior High School Manila Science High School

APPROVAL SHEET

In partial fulfilment of the requirements for Senior High School; this study is

entitled “ECONOMICAL DECLINE: NEW GENERATION CURRENCY, GRADUAL

CHANGE OF THE PHILIPPINE COIN POOL 2018-2019” has been prepared and

submitted by John Ethan J. Dela Cruz, who is hereby recommended for acceptance and

approval.

LOLITA P. FERNANDEZ, Ed. D.

Adviser

____________________ ____________________

Panelist Panelist

Approved in partial fulfilment of the requirements for the Research Project

completion.

DR. LOLITA P. FERNANDEZ

Chairperson

Acceptedin partial fulfilment of the requirements for the Research Project

completion.

Grade__________%

MS. MA EVA S. NACION

 Senior High School Manila Science High School

Dedication

We dedicate this research to our beloved country, the republic of the

Philippines, and its people for this study aims to give understanding on how subtle

changes in our lives may have a massive effect on the bigger picture that is noticed by less.

We hope that this study could contribute a lot to this country; allowing further studies and

topics of the same field to be explored and researched.

This study is also dedicated to Manila Science High School, for we

remember that the work we do is devoted to our school. As students of Manila Science High

School, we carry the name of our school making our achievements the school’s

achievements as well.

We address this research to the incoming Grade 12 Students as well, the

next generation of Mascian researchers, for they too, will both use and enhance their skills

and capabilities of research for the greater good. We anticipate that this study would be of

great use and guidance to them.

We pass on this study to aspiring researchers, the ones who seek

knowledge, those who pursue the knowledge and wisdom that can be used for the greater

good of the country and of its people. We hope that these future seekers of knowledge

would be able to further enhance and improve the notion of this study.
 Senior High School Manila Science High School

Acknowledgements

First of all, I acknowledge God for showing me the way and leading me to the right

path in conducting this research. His omnipotence and omniscience gave me the will and

endurance to be able to reach the goal of this study.

I would like to express my gratitude to the following as well:

Dr. Lolita P. Fernandez, our research adviser, for guiding me

throughout the the course of the writing of this research. She gave me her support which

assisted me in not only selecting a good topic for the research but to also have a successful

study that could be of importance to the society.

Mr. YfurPorche P. Fernandez for sharing his experience and

knowledge in scoping and refining a topic for research. His imparted knowledge served as a

guide throughout the formulation and process of the research as he was able to teach how

to properly scope a general topic into something more.

Ms. Maria Eva S. Nacion, our principal, for her support and blessing

without which this study would have been impossible.

The Panelists, for their insight. Thank you for your time, suggestions

and encouragement. Through which gave another perspective on the study.

Lastly, the Participants for helping in providing their insight and

experience to the study. Without them, there would be no data and results needed to finish

the study.
 Senior High School Manila Science High School

Table of Contents

Title……………………………………………………………………………………………………………………... i
Approval Sheet………………………………………………………………………………………………………. ii
Dedication……………………………………………………………………………………………………………… iii
Acknowledgments…………………………………………………………………………………………………….iv
Introduction……………………………………………………………………………………………………………..1
Methodology…………………………………………………………………………………………………………….7
Results and Discussion……..……………………………………………………………………………………...8

References……………………………………………………………………………………………………………….11

Appendices………………………………………………………………………………………………………………12
 Senior High School Manila Science High School

Introduction

In December 1995, a new set of coins and notes was issued which carried the logo

of the new BSP: 5- and 1-piso and 25-, 10-, 5- and 1-sentimo, with the aim of carrying out

the demonetization of all previous series by Jan 2, 1998. On July 10, 2001, BSP issued the

10-piso coin for general circulation to commemorate its 8th year anniversary. It has the

profiles of Andres Bonifacio and ApolinarioMabini in a con-joint or in tandem manner on the

obverse side. The reverse side bears the seal of the BangkoSentral ng Pilipinas which is

consistent with the common reverse design of the other six denominations. This has been

an additional denomination to the current coin circulation and a replacement for the 10-piso

NDS banknote. The series used again the Optima typeface.(BSP, 2019)

The 1997 and 1998 5 peso coins had no mint marks, but coins issued from 1999

onwards had mint marks. The 1997 and 1998 coins were minted by the Royal Canadian

Mint. However, not all 1997 and 1998 coins were minted by the Royal Canadian Mint; quite

a few were minted by the Manila Mint.(BSP, 2019)

On March 26, 2018, the Bangko Sentral ng Pilipinas introduced the New Generation

Currency Coin Series which was circulated through banks on March 27. The new series

features native Philippine flora. Sentimo denominated coins feature a stylized representation

of the Philippine flag on the obverse. The Peso denominated coins depicts the portraits of

renowned national heroes of the Philippines on the obverse. The coins are struck in Nickel-

plated steel for all six denominations, in response to the widespread hoarding and melting
 Senior High School Manila Science High School

down of the coins, decreasing the cost of production of minting the coins and address

concerns of the discoloration of the coins due to the humid, tropical environment. However,

the 10-sentimo coin is not included in this series, because it was removed as a general

circulation coin. (BSP, 2019)

Theories

1. Mercantilism- Wealth of a nation determined by accumulation of

gold and running trade surplus.(Bloomenthal, 2019) Tenets include:

• That every little bit of a country's soil be utilized for agriculture,

mining or manufacturing.

• That all raw materials found in a country be used in domestic

manufacture, since finished goods have a higher value than raw materials.

• That a large, working population be encouraged.

• That all exports of gold and silver be prohibited and all domestic

money be kept in circulation.

• That all imports of foreign goods be discouraged as much as possible.

• That where certain imports are indispensable they be obtained at first

hand, in exchange for other domestic goods instead of gold and silver.

• That as much as possible, imports be confined to raw materials that

can be finished [in the home country].

• That opportunities be constantly sought for selling a country's surplus

manufactures to foreigners, so far as necessary, for gold and silver.

Senior High School Manila Science High School

• That no importation be allowed if such goods are sufficiently and

suitably supplied at home.

2. Endogenous Growth- Endogenous growth theory has redefined the

concept of economic growth. It assumes that the long-run rate of growth is primarily

determined by endogenous variables that are internal to the system, such as human

capital, innovation and investment capital. (Liberto, 2019)

• The endogenous growth theory is an economic theory which argues

that economic growth is generated from within a system as a direct result of internal

processes.

• More specifically, the theory notes that the enhancement of a nation's

human capital will lead to economic growth by means of the development of new

forms of technology and efficient and effective means of production.

• Under this theory, knowledge-based industries play a particularly

important role — especially telecommunications, software and other high tech

industries — as they are becoming ever more influential in developed and emerging

economies.

3.Demonetization- Demonetization is the act of stripping a currency unit of

its status as legal tender. It occurs whenever there is a change of national currency:

The current form or forms of money is pulled from circulation and retired, often to

be replaced with new notes or coins. Sometimes, a country completely replaces the

old currency with new currency. (Chappelow, 2019)

 Demonetization is a drastic intervention into the economy that involves

removing the legal tender status of a currency.

 Senior High School Manila Science High School

 Demonetization can cause chaos or a serious downturn in an economy if

it goes wrong.

 Demonetization has been used as a tool to stabilize a currency and fight

inflation, to facilitate trade and access to markets, and to push informal

economic activity into more transparency and away from black and gray

market

Objectives of the Research

1. To determine the implications of the New Generation Currency to the current

economical state of the Philippines as a whole.

2. To identify the significant difference of the production cost of the New

Generation Currency and the New Design Series of 1995.

3. To evaluate the difference between the New Generation Currency and the

BSP New Design Series of 1995 and how they are related to the economic

state of their times.

Scope and Limitations

This study would mainly focus on the coins of the New Generation Currency(NGC)

design, not including the banknotes, but there are parts that may relate to the banknotes as

well. The scope of this study on the coins of the NGC would be how its introduction and

gradual circulation would affect the economy of the Philippines.

This study does not consider other factors that may affect the economy of the

Philippines because of the implementation of Endogenous Growth Theory in the study.

 Senior High School Manila Science High School

Paradigm

The objectives to be covered by the study

were determined. Using the objectives, a
survey was made to answer these objectives.

The answers were extracted, analyzed then

related to the objectives.

The theories of Endogenous growth,

Mercantilism and Demonetization were
applied to the analyzed answers.

With the theories applied to the answers, a

grounded theory relating to the economy
was then formulated.

Figure 1
 Endogenous growth states that the long-run rate of growth is primarily determined
by endogenous variables that are internal to the system, such as human capital,
innovation and investment capital. (Liberto, 2019)
 Mercantilism states thatthe wealth of a nation determined by accumulation of gold
and running trade surplus. (Bloomenthal, 2019)
 Demonetization isis the act of stripping a currency unit of its status as legal tender.
A country may completely replace the old currency with new currency. (Chappelow,
2019)
 Senior High School Manila Science High School

Theoretical Framework

ECONOMICAL DECLINE: NEW

GENERATION CURRENCY, GRADUAL
CHANGE OF THE PHILIPPINE COIN
POOL 2018-2019

Mercantilism Demonetization Endogenous Growth-

Wealth of a nation used as a tool to stabilize
determined by a currency and fight
accumulation of gold inflation, to facilitate
and running trade trade and access to
surplus. markets, and to push
informal economic activity
into more transparency
and away from black and
gray market
Theory that has redefined the
concept of economic growth.
It assumes that the long-run
rate of growth is primarily
determined by endogenous
variables that are internal to
the system, such as human
capital, innovation and
investment capital.

Abetter understanding and

increased awareness on the
small things that have big
impact on the economy

Figure 2
 Senior High School Manila Science High School

Methodology

The researcher would gather data and information from those working at the Banko

Sentral ng Pilipinas. The researcher would conduct an email interview on the possible

participants regarding the economic trajectory of the Philippines and the coins’ production

costs respectively.

The researcher then analyzed possible relations of the introduction of the New

Generation Currency design and the Philippine economy through the interviews. Using the

Endogenous growth theory, the researcher found how the introduction of a new currency

design will affect the economy of the Philippines in the long term.

Then, using the definition and uses of Demonetization, the researcher analyzed

what the reason of the Banko Sentral was when they chose to demonetize the old banknote

design, and one day the old coin design, and why they replaced it with the New Generation

Currency design banknotes and coin pool.

With the data that was gathered though the interviews and the theories and

definitions used in analyzing the data, the researcher created a grounded theory as to the
 Senior High School Manila Science High School

reason of how the introduction of the new generation currency coins’ designs and the

Philippine economy are related to each other.

Results and Discussion

With the data gathered, extracted and analyzed helped the researcher find that the

introduction of the NGC coin design and the economy of the Philippines to be directly

related.

Figure 3

The NDS design was demonetized by the BSP in order to secure and stabilize the

Philippine economy. Using Demonetization, the Banko Sentral was able to fight the inflation

rates of the country and the informal, black and grey, market activity in the Philippines

(Chappelow, 2019). As of current, the NDS currency coins have not yet been demonetized
 Senior High School Manila Science High School

as the coin pool of the NGC is still new and has not yet been fully circulated throughout the

Philippines, therefore it would be beneficial to start using the NGC coins in order to increase

circulation and to familiarize the use of the new coins.

Coins are a major part of an economy and the circulation of currency. The

introduction of the new design of the coins helped in battling against counterfeiters.

Counterfeiters are a major concern when it comes to a country’s currency as they create

counterfeit copies of the currency in question, thereby adding more money into the

circulation which would then lower the value of the currency as a whole. The theory of

Mercantilism comes into play here.

Mercantilism states that the wealth of a nation determined by accumulation of gold

and running trade surplus (Bloomenthal, 2019). If the counterfeit currency comes into

circulation, the running trade surplus would be affected and the wealth of the nation, or in

this case the currency’s value, would be affected negatively. The inflation rates in the

Philippine economy were slowly increasing before the NGC coins were introduced. The NGC

was then introduced by the Banko Sentral in order to counter the inflation in the Philippines.

Applying the theory of Mercantilism, we could say that the counterfeit currency was

countered by the introduction of the NGC coins to the public. Since then, the inflation rates

were decreasing slowly as the NGC coins are gradually being circulated in the economy of

the Philippines.
 Senior High School Manila Science High School

The goal, therefore, is that by creating a new design for the currency every decade

or so, the BSP would be able to secure the value of the currency by prolonging the process

of perfecting the old design by counterfeiters. As the issue of the design of the currency is

an internal matter in the economy of the Philippines, the Endogenous growth theory is

applicable.

The Endogenous growth theory states that the long-run rate of growth of the

economy is primarily determined by endogenous variables that are internal to the system,

such as human capital, innovation and investment capital (Liberto, 2019). In this case, the

coins are the capital. If the NGC was not introduced, the inflation rates would still be rising.

The NGC was then introduced and the Banko Central seized control of internal variable of

the economy, which is the capital, in order to protect the growth of the economy, fighting

inflation. With the Endogenous growth theory, the internal variable of the economy was

preserved and protected.

Conclusion

With the results, the researcher is able to formulate the theory grounded on the

results along with the theories of Mercantilism and Endogenous growth, and

Demonetization.
 Senior High School Manila Science High School

1. The extracted data from the survey showed that the introduction and circulation

of the NGC was to help in reducing the inflation and declining of the value of the

Philippine pesoin the Philippine economy.

Thus the changing of the currency is said to have a major role in influencing the

Philippine economy as a whole as this dictates the value of everything in the

economy in the Philippines.

2. The extracted data showed that there is a significant difference between the

production cost of the NDS and the cost of the NGC. The cost of production of

the NGC is higher as to that of the cost of the NDS. The reason for this is for the

added security features in the new design.

3. It is implied that there would be difference for the economical trajectory of the

Philippines before and during the introduction of NGC, although it is still too

early in the circulation of the NGC to know if there is a significant difference or

not.

The theory therefore is that the gradual change of the Philippine coin pool is a

measure against the declining economy of the Philippines created by the production and
 Senior High School Manila Science High School

circulation of counterfeit copies of the coins. The introduction of the NGC design is a

defensive measure against the threat of a declining economy.

Recommendation

In line with the conclusion given, there are certain recommendations for the

improvement of this study. The researcher formed the following recommendations:

1. Have a further analysis of the economic trajectory and its relation to the NGC

2. Look for a correlation between the usage of different coin pools and their respective

economic trajectory

3. To be able to analyze the economic trajectory once the NGC is the sole design being

circulated and the NDS has been demonetized.

References

A. Bloomenthal (2019). Mercantilism

B. Liberto(2019). Endogenous Growth Theory Definition

C. Chappelow(2019), Demonetization Definition

D. Banko Sentral Ng Pilipinas. Current Banknotes and Coins in Circulation

Senior High School Manila Science High School

APPENDICES
Senior High School Manila Science High School

APPENDIX A
Senior High School Manila Science High School
Senior High School Manila Science High School

APPENDIX B
 Senior High School Manila Science High School

Questionnaire

1. In what way could the introduction of the NGC relate to the current
economical state of the Philippines as a whole? How?

2. Is there a significant difference in the production cost of the NGC and the
New Design Series of 1995? Did it increase or decrease? Why?

3. Is there a difference between the New Generation Currency and New Design
Series of 1995 in how they are related to the economic state of their
times( the present economic state now vs. the state from 1995 to before the
introduction of the NGC)? In what way do they relate?
Senior High School Manila Science High School

APPENDIX C
 Senior High School Manila Science High School

John Ethan J. Dela Cruz

Address: Unit 3I Maple bldg. Garden Road, Peninsula Garden Midtown Homes Paco, Manila
Email Address: jedc2801@gmail.com Cellphone
number: 0917-533-8428

PERSONAL INFORMATION

Age: 17
Gender: Male
Date of Birth: October 28, 2001
Place of Birth: Sta. Ana, Manila
Civil Status: Single

EDUCATIONAL BACKGROUND

Senior High School: Manila Science High School

Address: Taft Avenue cor. Padre Faura St. Ermita, Manila
Year Attended: 2018-Present

Junior High School: Manila Science High School

Address: Taft Avenue cor. Padre Faura St. Ermita, Manila
Year Attended: 2014-2018

Elementary School: Don Bosco Technical College Mandaluyong City

Address: 736 Gen. Kalentong,Mandaluyong 1550 Metro Manila
Year Attended: 2008-2014

Pre-School: Sta. Isabel College

Address: 210 Taft Ave., Ermita, Manila, 1000 Metro Manila
Year Attended: 2006-2008

HONORS AND AWARDS

 Research Contest (Local) Top 8 (2016-2017)

 Division Science Fair 3rd place (2018-2019)
 Senior High School Manila Science High School

HOBBIES AND TALENTS

 Proficiency in Microsoft Office

 Proficiency in English
 Playing video games
 Watching anime
 Proficiency in Chinese Martial Arts
 Proficiency in Football(soccer)
 Basic knowledge on Japanese language and culture
 Proficiency in playing alto saxophone

RESEARCH EXPERIENCES

Academic Research, The Future Is Now: Fueling The Motivations of Esports Athletes
(2018-2019)
Adviser: Mr. Jonas Feliciano C. Domingo

Academic Research, Electromagnetic Generated Power Bank (2017-2018)

Adviser: Mrs. Rovie P. Labastida

Academic Research, Triple Source Renewable Energy Charger(TSREC) (2016-2017)

Adviser: Mrs. Charmaine F. Ilano

SEMINAR/WORKSHOP

 Polishing & Refining: Practical Tips in Scoping a Research 2019

Senior High School Manila Science High School

APPENDIX D
 Senior High School Manila Science High School

1. In what way could the introduction of the NGC relate to the current
economical state of the Philippines as a whole? How?

The introduction of the NGC was quite inevitable. Other central banks
in other countries usually redesign their banknotes every 10 years. Our
present currency series has been in place for about 25 years already. The
introduction may relate to the economical state in some way.

If the present currency isn’t changed, more and more counterfeiters

would perfect the design and creation of counterfeit banknotes and/or coins.
If this happens, there will be a greater more harmful impact to our economy
such as lowering the value of the Philippine Peso as a whole and would also
lead to inflation as more money is being circulated; more money than that
was calculated.

2. Is there a significant difference in the production cost of the NGC and the
New Design Series of 1995? Did it increase or decrease? Why?

There are some additional, though relatively minimal increase of

expenses in changing the design. The cost of changing designs comes down
to the choice of security features of the new design. The newly-developed
features which are made by cutting-edge technology are usually covered by
things like Intellectual Property Rights, which are more resistant to
counterfeiting for a longer period of time, thus an increase of costs.

3. Is there a difference between the New Generation Currency and New Design
Series of 1995 in how they are related to the economic state of their times(
the present economic state now vs. the state from 1995 to before the
introduction of the NGC)? In what way do they relate?

It is still too early to know how the introduction of the new generation
design would impact the current economic state, as the old design is still in
circulation.

However, the introduction of the NGC may help in reducing inflation

and also help in increasing the value of the Philippine Peso as it will be more
difficult for counterfeiters to copy the new designs of the banknotes and coins,
as mentioned in the previous questions.