Welborn M.

Murcilla
BA- Financial Managment
4BAF7A
FMP 8 / FME305 Monetary Policy and Central Banking

1. Elements of Financial System

The elements of Financial systems are:
Money is the start of the financial system and the means for making purchases. Accumulating
money is a determining factor in defining wealth. Those who store more money are wealthier than
those who do not. The consistency of money has a tendency to morph based on changes in the
financial system and technology.
Financial instruments are also known as securities, though the layman's terms are stocks, bonds,
mortgages and insurance. At one time, the dealing and trading of stocks was typically limited to
wealthy individuals who could afford to pay the costly fees charged by stockbrokers. In recent
years, this practice has become more affordable with the introduction of mutual funds. Mutual
funds pool the savings of a broad number of investors. By leveraging a high volume of buyers,
more investors can purchase, trade and accumulate portfolios.
Financial markets are trading houses that are dedicated to the purchase and sale of stocks and
bonds, such as the New York Stock Exchange or the NASDAQ. Buyers and sellers gather at the
market to determine buying and selling prices for securities, typically with assistance from a
stockbroker. Markets continually fluctuate, resulting in inherent risks in the process.
Financial Institutions The common term for financial institutions is banks. Though once a brick
and mortar building that held money in vaults, modern financial institutions offer a variety of
products and services including mortgages, insurance and brokerage accessibility. Financial
institutions now compete in the financial market by offering one-stop shopping for financial
transactions and advice.
Regulatory agencies were introduced by the government to monitor the activities of financial
institutions and markets. Through examination and enforcement of strict guidelines, regulatory
agencies supervise members of the financial system to ensure the safety of the public's money and
investments. Government examiners review the systems in place at financial institutions and
markets, and they teach and encourage best practices.
Central Banks Almost every country in the world has a central bank that is integral to each
country's government. The founding of central banks was originally a means to finance wars, but
today's central banks control the availability of money and credit. They are integral to the stability
of the country's financial system as they oversee national currency and its value. The U.S. Federal
Reserve is one of the most important central banks in the modern world.
Reference - https://bizfluent.com/info-8790780-six-parts-financial-system.html
 2. Structure of Philippine Financial System
The financial structure comprises the Monetary Authorities (Central Bank of the Philippines and
the Ministry of Finance), 32 commercial banks, 931 rural banks, 10 savings banks, 37
development banks, 72 stock savings and loans associations, 250 finance companies, 12
investment houses, 59 investment companies, 448 pawnshops, and various specialised financial
institutions (Table 7.1 and Appendix 4). Some of the financial institutions are government- or
semi-government-owned, e.g. the Philippine National Bank, the Philippine Veterans Bank, the
Development Bank of Philippines, Land Bank, Philippine Amanah Bank, and the specialized,
non-bank institutions. The most dominant and powerful financial institutions are the world bank,
International Monetary Fund, Asian Development Bank and the multinational or transnational
banks. Although these are involved in the global banking orfinance, they greatly influence the
operations of ourfinancial system. Hence they also CONTROL our economy. Structure of
the Philippine Financial SystemBangko Sentral ng Pilipinas Banking Institutions
Private banking institutions. Commercial banking institutions
-expanded commercial banks/universal banks- ordinary commercial banks.
Thrift banks- savings and mortgage banks- private development banks- stock savings and loan
institution.
Government banking institutions. Philippine National Bankb. Development Bank of the
Philippines. Land Bank of the Philippines. Philippine Amanah Bank Non-bank financial
institutions1.
Private non-bank financial institutions. Government Service Insurance System
Investment houses Social Security System
Investment companies. Financial Reforms
Financing companies. In 1980, a series of laws were introduced
Securities dealers/brokers. amending
Non-stock savings and loan associations. General Banking Act
Building and loan associations Savings and Loan Associations Act
Pawnshops Private Development Banks Act
Lending investors. Charter of the Development Bank of
Retirement/provident/pension fund manager thePhilippines
Trust companies/departments Investment Houses Act
Insurance companies Central Bank ActThese package of reforms in
Credit unions/cooperative the financial systemare part of the
Unlicensed moneylenders. recommendations of IMF-CB Groupin 1972
Government non-bank financial institutions
3. The Role of:
The World Bank is a vital source of financial and technical assistance to developing
countries around the world. We are not a bank in the ordinary sense but a unique
partnership to reduce poverty and support development. The World Bank Group comprises
five institutions managed by their member countries.
The International Monetary Fund’s fundamental mission is to help ensure stability in
the international system. It does so in three ways: keeping track of the global economy and
the economies of member countries; lending to countries with balance of payments
difficulties; and giving practical help to members.
The Asian Development Bank targets a poverty free Asia and Pacific region. Its mission
is to help developing member countries in reducing poverty and improving the quality of
life of their people.
The Bangko Sentral ng Pilipinas provides policy directions in the areas of money,
banking and credit. It supervises operations of banks and exercises regulatory powers over
non-bank financial institutions with quasi-banking functions.

4. The Role of Anti-Money Laundering Council

The Anti-Money Laundering Council (AMLC) is the agency of the Government of the
Philippines that is tasked to implement the provisions of Republic Act No. 9160, also
known as the “Anti-Money Laundering Act of 2001” (AMLA), as amended, and Republic
Act No. 10168, also known as the “Terrorism Financing Prevention and Suppression Act
of 2012” (TFPSA).
It serves as the Philippines' central anti-money laundering/counter-terrorism financing
(AML/CTF) authority. As such, it functions as the AML/CTF regulator and
supervisor, financial intelligence unit, and primary law enforcement agency of the
Philippines against money laundering and terrorist financing.
The AMLC may refer to (1) the government agency or (2) the Council, which heads the
said government agency.

To protect and preserve the integrity of the Philippine financial system, including the
confidentiality of bank accounts.[2]

To ensure that the Philippines shall not be used as a money laundering site for the proceeds
of any unlawful activity.[2]

To extend cooperation, consistent with Philippines’ foreign policy, in transnational

investigations and prosecutions of persons involved in money laundering activities
wherever committed.