sound and prudent practices consistent with
BANGKO SENTRAL NG
PILIPINAS
The 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.
BSP is establish by congress pursuant to
R.A 7653 (BSP Charter).
In accordance with a provision in the 1987
Constitution, President Fidel V. Ramos signed
into law Republic Act No. 7653, the New Central
Bank Act, on 14 June 1993. The law provides for
the establishment of an independent monetary
authority to be known as the Bangko Sentral ng
Pilipinas, with the maintenance of price stability
explicitly stated as its primary objective. This
objective was only implied in the old Central
Bank charter. The law also gives the Bangko
Sentral fiscal and administrative autonomy which
the old Central Bank did not have. On 3 July
1993, the New Central Bank Act took effect.
The reason why eagle is the logo of BSP is
because it aspires to soar towards becoming a
world-class monetary authority. The three stars
represent the 3 Pillars of central banking: Price
stability, financial stability, and payments &
settlement systems.
Objectives:
 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 Bangko Sentral shall promote financial
stability and closely work with the National
Government, including, but not limited to,
the Department of Finance, Securities and
Exchange Commission, the Insurance
Commission, and the Philippine Deposit
Insurance Corporation.
 The Bangko Sentral shall oversee the
payment and settlement systems in the
Philippines, including critical financial
market infrastructures, in order to promote
the maintenance of financial stability.
Mission
To promote and maintain price stability, a strong
financial system, and a safe and efficient
payments and settlements system conducive to a
sustainable and inclusive growth of the economy.
Vision
The BSP aims to be recognized globally as the
monetary authority and primary financial system
supervisor that supports a strong economy and
promotes a high quality of life for all Filipinos.
PRICE STABILITY
To maintain the price stability, the BSP
implements the monetary policy. The primary
objective of the BSP's monetary policy is to
promote a low and stable inflation conducive to a
balanced and sustainable economic growth. By
keeping price stable, the BSP helps ensure
strong and sustainable economic growth and
better living standards.
FINANCIAL STABILITY
As a guide, the BSP and the Financial Stability
Coordination Council (FSCC) have adopted the
following definition of "Financial Stability."
“Financial stability is the state when
prospective systemic risks are mitigated so as
to allow financial consumers, both individuals
and corporate entities, to pursue viable
economic goals while avoiding disruptions to
the smooth functioning of the financial system
that can negatively affect the rest of the
economy."
The promotion of “Financial Stability” is a
formal mandate that is uniquely ascribed to the
Bangko Sentral ng Pilipinas (BSP). This is
provided for in the amended BSP Charter
(Republic Act No. 11211) which was signed by
President Duterte in February 2019.
The objective of “Financial Stability” is to
enhance the resilience of the financial system, in
its totality and in its components, from shocks.
This is done by managing systemic risks that
could affect the financial system so that finance
continues to be a value proposition to consumers
in normal times while remaining resilient when
disruptions do arise.
To maintain the financial stability, the Financial
Stability council (FSCC) made the
Microprudential Policy Strategy. Macroprudential
policy is the means for mitigating systemic risks.
PAYMENTS AND SETTLEMENTS
Payment systems are essential to the
effective functioning of financial systems
worldwide. They provide the channels
through which funds are transferred among
banks and other institutions to discharge
payment obligations arising from economic
and financial transactions across the entire
economy. An efficient, secure and reliable
payment system reduces the cost of
exchanging goods and services, and it is an
essential tool for the effective implementation
of monetary policy, and the smooth
functioning of money and capital markets.  
In the Philippines, the BSP takes the lead in
promoting an efficient payments and
settlements system by providing:
 a. the necessary infrastructure through
the operations of the Philippine Payment
and Settlement System or the
“PhilPaSS”; and
 b. a policy and regulatory framework,
also known as the National Retail
Payment System or NRPS, to establish
a safe, efficient and reliable retail
payment system in the country.
Function:
Under the New Central Bank Act of 1993, the
BSP performs the following functions, all of
which relate to its status as the Republic’s
central monetary authority.
 Liquidity Management.
The BSP formulates and implements
monetary policy aimed at influencing
money supply consistent with its primary
objective to maintain price stability.
 the issuance of BSP Securities provides
the BSP with greater flexibility in
managing the liquidity in the financial
system, particularly in the face of large
structural liquidity surplus arising from
capital flows or additional liquidity
released from the reduction in the reserve
requirement ratios of banks.
 Currency issue.
The BSP 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 tender for all private
and public debts.
 Lender of last resort.
The BSP extends discounts, loans and
advances to banking institutions for
liquidity purposes.
 A lender of last resort is whoever you
turn to when you urgently need funds
and you've exhausted all your other
options. Banks typically turn to their
lender of last resort when they cannot
get the funding they need for their daily
business.
Financial Supervision.
The BSP supervises banks and
exercises regulatory powers over non-
bank institutions performing quasi-
banking functions.
 Management of foreign currency
reserves.
The BSP seeks to maintain sufficient
international reserves to meet any
foreseeable net demands for foreign
currencies in order to preserve the
international stability and convertibility of
the Philippine peso.
 Reserve management is a process that
ensures that adequate official public
sector foreign assets are readily
available to and controlled by the
authorities for meeting a defined range
of objectives for a country or union.1 In
this context, a reserve management
entity is normally made responsible for
the management of reserves and
associated risks.
 Determination of exchange rate
policy.
The BSP 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.
 Under a market‐determined exchange
rate framework, the BSP does not set
 the foreign exchange rate but instead
allows the value of the peso to be
determined by the supply of and
demand for foreign exchange

 Other activities.
The BSP functions as the banker,
financial advisor and official depository
of the Government, its political
subdivisions and instrumentalities and
GOCCs.

[ CITATION Ban20 \l 13321 ]