MONETARY POLICY AND CENTRAL

BANKING

Student Name: Charlot Albarico Degree Program: BSBA-FM

Section: 3.1 BSBAFM-CY1-AM Mobile Number: 09102341112

Professor Name: Dan Jeward Rubis Email Address: 61801516

TASK 1: Familiarize yourself with the different generation of paper money issued in our
country beginning in 1985. The New Design Series which was launched in 1985 and the
New Generation Currency launched in 2010. After which, your project is to collect a copy
of each denomination of paper money and described its features. Follow these steps:
1. The New Design Series of Paper Money launched by the Bangko Sentral ng Pilipinas in
1985 until 2009 featuring the Old logo of BSP and compared it with the New Generation
Currency of Paper Money containing the current BSP Logo.
2. Collect Pictures of the following Denomination for both New Design Series and New
Generation Currency Series:
A. Php 20.00
B. Php 50.00
C. Php 100.00
D. Php 200.00
E. Php 500.00
F. Php 1,000.00
3. Describe and compare the feature of each paper money. Front and Back of the Paper
Money.
ACTIVITY 1-A: Based on what you have read in the article and recalling your own
learning experiences, write at least 10 words that comes into your mind when you hear the
word “MONEY” and discuss why.
1. Asset, because it is something what you owned, it is your wealth
2. Economic, unit that functions as a generally recognized medium of exchange for
transactional purposes. Having a physical property to be adopted by market
participants as a medium of exchange.
3.  Stability, the goal in life to me is not necessary to become rich, but instead to be
financially stable
4. Important, money helps us achieve our life's goals and supports — the things we care
about most deeply — family, education, health care, charity, adventure and fun.
5. Freedom, when you have money, you have the freedom to do whatever you wish in
this life.  Money is freedom.  Without it, your doors are closed.  With it, you have
endless opportunities.
6. Prestige, the more money you have and make the more prestigious you become.
7. Money is greed. Psychologically it shackles us and forces us to make irrational
decisions. It is more easily available than heroin but far more addictive. Why isn’t
there a rehab for those who are incapable of controlling themselves and who
continually spectate as their lives spiral out of control, Isn’t that what school is for?
Instead, further education saddles us with debt that lasts a lifetime and impedes us
from flourishing economically. School isn’t the cure it symptomatic of the disease.
And that won’t ever change, the bankers are making too much money. They have
found their mechanism for personal enrichment and are exploiting the future of this
country. We are rewarded for our selfishness and greed.
8. Savings. We have to be very conscious of how to use it. Money is only a good
resource
9. Dreams, what are your dreams and how will you understand your money so that you
can achieve them?  The time spent understanding your money and budgeting is
directly correlated with how much of it you have so make it your friend not the
enemy and make it work for you.
10. Powerful, the more money you have, the more powerful you are. And when people
have a low sense of their personal power, they have an overwhelming urge to amass
large sums of money quite out of proportion to their needs. No matter how much they
acquire, it’s never enough. This approach also aligns with greed. A greedy person
never has enough, no matter how much he or she gets.
 ACTIVITY 1-B: Based on what you have read in the article, create a Venn Diagram
on one sheet of paper showing the differences between paper and plastic money.

ACTIVITY 1-C: From these circumstances, imagine if the Inflation triggers again
and may rise on the following months, discuss how will it affect you as a student and
your family.
In the short-run, it is more likely the Central bank will increase interest rates to
moderate the inflation rate. Savers who have fixed income may become relatively worse
off. Borrowers, by contrast, are likely to find it easier to pay back their debts. A higher
inflation rate could cause greater uncertainty amongst business leading to lower
investment.  Inflation may also cause a depreciation in the exchange rate.
As a student, who is dependent to my mom, with rising prices, it can create more
confusion over which prices are good value. It could lead to look for a cost around different
shops comparing prices (this is known as shoe leather costs). Higher inflation will raise the cost
of living. Besides in my mom’s business, it means making capital investments that, under
different circumstances, might be put off until later. Many investors buy gold and other precious
metals when inflation takes hold, but these assets' volatility can cancel out the benefits of their
insulation from price rises, especially in the short term. 

TASK 2: Read the article discussing the overview, history, objectives, and functions of the
Bangko Sentral ng Pilipinas (BSP). The report will provide you enough information about
BSP and the role it plays in our economy. After reading the article, you will be tasked to
draw a diagram. Follow these guidelines.

1. Read and analyze carefully how the article discusses BSP as the helm of the
Philippine Financial System. Notice that BSP provides policy directions in the areas
of money, credit, and banking.

2. BSP has supervision over operations of banks and exercise regulatory powers over
the operations of bank and non-bank financial institutions. One of the objectives of
BSP is to help to create a stable financial environment.

3. Based on what you have read in the article about the objectives and functions of
BSP, use your creativity, and draw a diagram or poster showing the role of the BSP
as a central bank in our country.

4. On a separate sheet of paper, write an essay with at least 200 words explaining your
poster.

MY POSTER:

Explanation:

The BSP provides policy direction in the areas of money, In my poster the Building
means Inflation targeting which the BSP’s way of conducting monetary policy to achieve its
primary objective of price stability. The blue color it means the Philippines which has Bangko
Sentral ng Pilipinas. Inside of it is the Operations refer to the buying/selling of government
securities, lending/borrowing against underlying assets as collateral, acceptance of fixed-term
deposits, foreign exchange swaps, and e power and authority to issue the national currency.
BSP’s notes and coins are issued against, and in amounts not exceeding, the assets of the BSP.
All notes and coins issued by the BSP are fully guaranteed by the government and are considered
legal tender for all private and public debts. Inside of it also means security, it is to make sure
that everything is good and has no problem. As you can see, it shaped like a circle because The
BSP’s mandate on international operations under the purview of the International Operations
Department is to support the promotion and maintenance of price stability, external
sustainability, and the integrity and value of the Philippine peso through the effective
management of external debt, foreign investments and other foreign exchange (FX) transactions.

ACTIVITY 2-A: As a Financial Management Student, do you see yourself working in

Bangko Sentral ng Pilipinas, Why and Why Not?

Ever since I was a kid, I never see myself working at BSP but instead maybe having
connection at BSP because I have a plan already. And I want to be a business woman soon.

ACTIVITY 2-B: Based on what you have read in the articles, your task is to write an
argumentative essay discussing the importance of monetary policies and how BSP uses
these policies to achieve their objective

Fundamentally, monetary policy can influence the price level—the rate of inflation, the
aggregate price level in an economy. And it is appropriate to provide a more expansionary
monetary policy when there's evidence that inflation is falling or will fall below the desirable
level. For example, recently there was evidence in the Treasury market that expected inflation
had fallen. In circumstances like that, an easing of monetary policy is an attempt to stimulate the
economy in such a way as to help bring the inflation rate and expected inflation back to target.
Central banks have three monetary policy objectives.1 The most important is to manage
inflation. The secondary objective is to reduce unemployment, but only after controlling
inflation. The third objective is to promote moderate long-term interest rates. Download Primer
on Inflation Targeting The primary objective of the BSP's monetary policy is “to promote price
stability conducive to a balanced and sustainable growth of the economy” (Republic Act 7653).
The adoption of inflation targeting framework of monetary policy in January 2002 is aimed at
achieving this objective. Inflation targeting is focused mainly on achieving a low and stable
inflation, supportive of the economy’s growth objective. This approach entails the announcement
of an explicit inflation target that the BSP promises to achieve over a given time period. To
achieve the inflation target, the BSP uses a suite of monetary policy instruments in implementing
the desired monetary policy stance, depending on its assessment of the outlook for inflation. If
the BSP perceives the inflation forecast to exceed the target, then it implements contractionary
monetary policy to bring down inflation to its target path. On the other hand, if the BSP sees the
inflation forecast to be lower than the target or there is need to increase liquidity in the financial
system, then it can implement expansionary monetary policy. The reverse repurchases (RRP) or
borrowing rate is the primary monetary policy instrument of the BSP.
TASK 3: When you have finished going through the experiences and reading resources
When you have finished going through the experiences and reading resources contained in
this module, you will prepare an analysis based on the cases that are provided. Please take
note of the writing conditions in crafting your case analysis and expectations that follow:

1. Read and understand the scenario on the given case. Your highest possible grade is 100
points per case.

2. Express your analysis and thoughts on the given case in 400 words. You must indicate
your total word count on the last page of your work.

3. The components of your Case Analysis Shall be the following:

A. Introduction

B. Statement of the Problem/Issue in the Case

C. Solution to the Problem/ Thoughts about the issue

D. Conclusion

CASE

Philippines Central Bank Inches Closer to Issuing New Digital Banking Regulation

September 8, 2020 the Bangko Sentral ng Pilipinas (BSP) is planning to issue later this
month a new circular on the establishment of digital banks, Salceda is suggesting changes to the
BSP’s initially proposed circular, including a much higher minimum capitalization requirements
of PHP 20 billion for digital banks, which must be raised within four years, as well as a limit to
the central bank’s granting of digital banking licenses to five applicants over a five-year period.
Salceda is also proposing to raise up the foreign ownership limit of a digital bank from the 40%
proposed by the BSP to 70%.
 BSP Lead representative Diokno said "Computerized banks will assume a significant
part in the advanced monetary biological system. We consider these to be as extra accomplices in
further advancing business sector efficiencies and growing access of Filipinos to a wide scope of
monetary administrations, carrying us nearer to the acknowledgment of our objective that at any
rate 50% of all out retail installment exchanges have moved to computerized, and 70 percent of
grown-up Filipinos have exchange accounts by year 2023. This apparently removes tacky
focuses and jump our monetary comprehensiveness plan."

Advanced financial candidates are relied upon to have sound computerized

administration, hearty, secure and strong innovation framework, and successful information the
board system and practices. The BSP perceives that advanced banks are presented to similar
monetary dangers looked by traditional manages an account with possible raised openness to
network protection and illegal tax avoidance hazards. In that capacity, advanced banks would be
dependent upon similar prudential necessities material to different kinds of manages an account
with recalibration to be proportionate to their plan of action and danger profile. The Financial
Board may restrict the quantity of advanced banks that might be set up considering the all-out
number of utilizations got and the appraisal of the general financial circumstance. "Basically, the
BSP is hoping to pull in players with solid offer, adequate monetary strength, specialized ability
of the board and powerful danger the executives," Diokno added.

The Financial Board may choose to restrict the quantity of computerized banks that might
be dispatched in the Philippines. There have been numerous applications that were submitted,
however it may not be important or pragmatic to audit and support every one of them. The BSP
is allegedly intending to work with advanced banks that have a solid incentive, satisfactory
monetary strength, specialized mastery, and appropriate danger the board approaches.

WORD COUNT: 406

ACTIVITY 3-A: After reading the article, what do you think are the objectives of the
Bangko Sentral ng Pilipinas? Has it been effective in accomplishing them? Justify

The primary objective of the Bangko Sentral is to maintain price stability conducive to a

balanced and sustainable growth of the economy and employment. It shall also promote and
maintain monetary stability and the convertibility of the peso. The BSP keeps the cash supply
sufficiently huge so creation will be sufficiently high to maintain a strategic distance from
supply-side expansion and adequately low to dodge request side swelling. The Philippine peso is
market situated and not pushed "more fragile" or "more grounded." Further, the peso is
convertible to basically all monetary standards. The BSP has been constantly effective in light of
the fact that its capacities are appropriately restricted. At the point when an association has goals
that might be in clash with one another, it will fail. National bank strategies and apparatuses are
not intended to accomplish "business" or "monetary development." The BSP is the awesome.

ACTIVITY 3-B: List down at least 3 Regulations mentioned in the reading material and
briefly discuss its nature and provisions.

1. Prudential Regulation Authority (PRA), is a answerable for the prudential guideline

and oversight of banks, building social orders, credit associations, guarantors and
significant venture firms. It sets principles and administers monetary organizations at the
level of the individual firm. In the Philippines, that job is satisfied completely by the
BSP. Segment 4 of the GBL explicitly expresses that the 'tasks and exercises of banks
will be dependent upon management of the Bangko Sentral'. Oversight, as characterized
in Area 4, not just thinks about the declaration by the BSP of rules of lead and norms of
tasks for banks (presently set out in the Manual of Guidelines for Banks, as enhanced or
changed by the BSP now and again), yet in addition visitorial powers, that is, the
directing of assessments and examinations of the exercises of keeps money with a view to
deciding their consistence with those principles and norms, and upholding brief and
remedial activity in instances of penetrates of the equivalent. At last, the point is to
guarantee the proceeded with dissolvability and liquidity of banks.

2. Management Bank, The BSP distributed the Handbook on Corporate Administration 'to
improve corporate administration in the Philippine financial framework'. The BSP
likewise gave the standards of technique on managerial cases including chiefs and
officials of banks. It is likewise adjusting its guidelines to worldwide accepted procedures
that encourage great corporate administration in the financial area, for example, the
Standards for Improving Corporate Administration proclaimed by the Basel Board on
Financial Management. In such manner, the BSP has required each bank to delegate a
full-time boss consistence official to deal with a consistence framework intended to
recognize and alleviate business chances that may dissolve the establishment estimation
of the bank. To secure the assets of the investors and lenders of banks, the Money related
Board may control the installment of remuneration, recompenses, expenses, rewards,
investment opportunities, benefit sharing and incidental advantages to bank chiefs and
officials, in remarkable cases and when conditions warrant, for example, when a bank is
under comptrollership or conservatorship, when it is discovered to direct business in a
risky and shaky way, or when it is in an inadmissible monetary condition. Towards this
end, the Money related Board necessitates that the aggregate sum of unbooked valuation
holds and conceded charges be deducted from the overall gain of the bank in case of
benefit sharing. Further, when the absolute pay bundle (counting pay rates, stipends,
charges and rewards) of chiefs and officials is altogether inordinate when contrasted and
peer bunch midpoints, the Financial Board may arrange a decrease of the bundle to a
healthier level. It should likewise be noticed that the pay of chiefs all in all is controlled
by Segment 29 of the Reconsidered Organization Code, which commands that the
 absolute yearly remuneration of chiefs should not surpass 10% of the bank's net gain
before charge during the former year

3. Recovery resolution, The collector should decide, straightaway yet not later than 90
days after the takeover, regardless of whether the bank might be restored or in any case
put in a condition that would allow it to continue business with wellbeing to its investors
and different loan bosses, and the overall population. Any such assurance for the
resumption of business is liable to earlier Financial Board endorsement. If the collector
verifies that the bank can't be restored or allowed to continue business, the Money related
Board will inform the top managerial staff of the bank in like manner, and teach the
recipient to exchange the bank. The beneficiary will at that point record an ex parte
request in court for help with the liquidation of the bank as per a liquidation plan received
by the PDIC for general application to every shut bank and convert the resources of the
bank to cash, discarding the equivalent to lenders and different gatherings, to pay the
obligations of the bank as per the principles on simultaneousness and inclination of
credits under the Common Code of the Philippines, and organization activities to gather
and recuperate records and resources of, or safeguard any activity against, the bank. The
activities of the Financial Board taken under Segment 30 of the New National Bank Act
are conclusive and executory, and may not be limited or put aside by a court, aside from
on request for certiorari on the ground that the activity being referred to was in
abundance of ward or finished with such grave maltreatment of attentiveness as to add up
to need or overabundance of purview. Under the revised PDIC Sanction, a bank
requested to be shut by the Money related Board will presently don't be restored. The
PDIC, as the assigned recipient, will continue with the takeover and liquidation of the
shut bank, without the assent of the investors, top managerial staff, contributors and
different lenders of the shut bank.