GUNGON, Rena Marie C.

(A-116)
(TTh 10:10AM – 11:40AM)

YMATHBUSFIN – 6219
Final Assignment #1: Bangko Sentral ng Pilipinas

1. What is a Bangko Sentral ng Pilipinas? What are the mission and vision of BSP?

According to Bangko Sentral ng Pilipinas About the Bank (2021), Bangko Sentral ng Pilipinas
(BSP) is the central bank of the Republic of the Philippines. It was established on 3 July 1993
pursuant to the provisions of the 1987 Philippine Constitution and the New Central Bank Act of
1993. The BSP took over from Central Bank of Philippines, which was established on 3 January
1949, as the country’s central monetary authority. The BSP enjoys fiscal and administrative
autonomy from the National Government in the pursuit of its mandated responsibilities.

The mission is: “BSP is committed to promote and maintain price stability and provide proactive
leadership in bringing about a strong financial system conducive to a balanced and sustainable
growth of the economy. Towards this end, it shall conduct sound monetary policy and effective
supervision over financial institutions under its jurisdiction.”

The vision is: “The BSP aims to be a world-class monetary authority and a catalyst for a globally
competitive economy and financial system that delivers a high quality of life for all Filipinos.”

2. Enumerate the functions and operation and Explain?

The BSP’s primary objective is to maintain price stability conducive to a balanced and sustainable
economic growth. The BSP also aims to promote and preserve monetary stability and the
convertibility of the national currency.

The BSP 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.

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Under the New Central Bank Act, the BSP performs the following functions, all of which relate to
its status as the Republic’s central monetary authority:

1. Liquidity Management

Formulates and implements monetary policy aimed at influencing money supply consistent with
its primary objective to maintain price stability.

2. Currency Issue

Has the exclusive power to issue the national currency. All notes and coins issued by the BSP
are fully guaranteed by the Government and are considered legal tenders for all private and public
debts.

3. Lender of Last Resort

The BSP extends discounts, loans, and advances to banking institutions for liquidity purposes.

4. Financial Supervision

The BSP supervises banks and exercises regulatory powers over non-bank institutions
performing quasi-banking functions

5. Management of Foreign Currency reserves

The BSP seeks to maintain sufficient international reserves to meet any foreseeable net demands
for foreign currencies to preserve the international stability and convertibility of the Philippine
peso.

6. Determination of exchange rate policy

Determines the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-
oriented foreign exchange rate policy such that the role of Bangko Sentral is principally to ensure
orderly conditions in the market.

Other activities, the BSP functions as the banker, financial advisor and official depository of the
Government, its political subdivisions and instrumentalities and government-owned and
controlled corporations.

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7. What are the duties and responsibilities of the Governor of the BSP and Explain?

The governor is the chief executive officer of the BSP and is required to direct and supervise the
operations and internal administration of the BSP.

A deputy governor heads each of the BSP's operating sector as follows:

• Monetary Stability Sector takes charge of the formulation and implementation of the
BSP’s monetary policy, including serving the banking needs of all banks through accepting
deposits, servicing withdrawals, and extending credit through the rediscounting facility.
• Supervision and Examination Sector enforces and monitors compliance to banking laws
to promote a sound and healthy banking system.
• Resource Management Sector serves the human, financial and physical resource needs
of the BSP

According to Pursuant to Republic Act No. 7653 (The New Central Bank Act), the Governor shall
be the chief executive officer of the Bangko Sentral. His powers and duties shall be to:

• Prepare the agenda for the meetings of the Monetary Board and to submit for the
consideration of the Board the policies and measures that he believes to be necessary to
carry out the purposes and provisions of said Act.
• Execute and administer the policies and measures approved by the Monetary Board.
• Direct and supervise the operations and internal administration of the Bangko Sentral.
• Appoint and fix the remunerations and other emoluments of personnel below the rank
of a department head in accordance with the position and compensation plans approved
by the Monetary Board.
• Render opinions, decisions, or rulings, which shall be final and executory until reversed
or modified by the Monetary Board, on matters regarding application or enforcement of
laws pertaining to institutions supervised by the Bangko Sentral and laws pertaining to
quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board,
and the implementation thereof; and
• Exercise such other powers as may be vested in him by the Monetary Board.

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Additionally, in accordance with Who We Are - Governance of the Bank (2021), the Governor of
the Bangko Sentral shall be empowered to:

a) Represent the Monetary Board and the Bangko Sentral in all dealings with other
offices, agencies and instrumentalities of the Government, and all other persons or
entities, public or private, whether domestic, foreign, or international.

b) Sign contracts entered by the Bangko Sentral, notes and securities issued by the Bangko
Sentral, all reports, balance sheets, profit and loss statements, correspondence, and other
documents of the Bangko Sentral.

c) Represent the Bangko Sentral, either personally or through counsel, including private
counsel, as may be authorized by the Monetary Board, in any legal proceedings, action
or specialized legal studies.

d) Delegate his power to represent the Bangko Sentral, to other officers upon his own
responsibility: Provided, however, that in order to preserve the integrity and the prestige
of his office, the Governor of the Bangko Sentral may choose not to participate in
preliminary discussions with any multilateral banking or financial institution on any
negotiations for the Government within or outside the Philippines. During the negotiations,
he may instead be represented by a permanent negotiator.

REFERENCES

Bangko Sentral ng Pilipinas About the Bank. (2021). Bsp.gov.ph.

https://www.bsp.gov.ph/SitePages/AboutTheBank/AboutTheBank.aspx
Who We Are - Governance of the Bank. (2021). Bsp.gov.ph.
https://www.bsp.gov.ph/Pages/AboutTheBank/WhoWeAre/OrganizationAndGovernance/TheGo
vernor/TheGovernor.aspx
Module 7: Bangko Sentral ng Pilipinas: Mathematics in Business Finance. (2021).
Instructure.com. https://hau.instructure.com/courses/4974/pages/module-7-bangko-sentral-ng-
pilipinas?module_item_id=390273