RESEARCH WORK: BANGKO SENTRAL NG PILIPINAS

In the current information given by the official website of Bangko Sentral ng Pilipinas it implies
that 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.

The diversification strategy promoted by the Bangko Sentral ng Pulipinas is to mandate on

international operations by supporting 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, these are all done with
the intelligence the International Operations Department. It is also said that in terms of foreign policies
regarding the promotion of portfolios and diversification by investors, the Bangko Sentral ng Pilipinas
promote a policy environment that is market-oriented and supportive of the Philippine economy’s
sustained expansion, the BSP, through the International Operations Department (IOD), ensures that the
country’s foreign exchange (FX) regulatory framework remains appropriate for the needs of a dynamic
and expanding economy.

Bangko Sentral ng Pilipinas offers investments such as Loans and Credits, the BSP extends
discounts, loans and advances to banking institutions in order to influence the volume of credit
consistent with objective of price stability and maintenance of financial stability. It also grants loans or
advances to banking institutions in precarious financial condition or under serious financial pressures,
subject to certain conditions. One of the advantages and benefits accessible in Bangko Sentral ng
Pilipinas is Rediscounting, Overdraft Credit Line, and Emergency Loan. Rediscounting is a standing credit
facility provided by the BSP to help banks meet temporary liquidity needs by refinancing the loans they
extend to their clients. Through the facility, the BSP also makes possible the timely delivery of credit to
all productive sectors of the economy. Moreover, rediscounting is one of the monetary tools of the BSP
to regulate the level of liquidity in the financial system. The BSP’s rediscounting is administered by the
Department of Loans and Credit. Overdraft Credit Line by The BSP makes banks participating directly in
the clearing operations of the Philippine Clearing House Corporation to cover shortfalls in the banks’
demand deposit accounts with the BSP arising from clearing operations. The BSP imposes a ceiling on
the amount of overdraft a bank may incur due to failure to cover clearing losses through interbank
borrowings and/or repurchase agreements with BSP. The ceiling is defined as the sum of clean OCL
equivalent to 15% of the bank’s rediscounting line with BSP and the collateralized OCL that will be
extended by the BSP. While Emergency Loan extends financial assistance to banking institutions in the
form of fully secured Emergency Loan as a temporary remedial measure to help solvent banks overcome
their liquidity problems arising from causes beyond their control, pursuant to Section 84 of R.A. No.
7653, as amended by R.A. No. 11211. The assistance shall be limited to the amount needed by the
applicant bank to overcome the emergency or financial predicament but shall not exceed 50% of its
deposits and deposit substitutes and provided that any emergency advance should be collateralized by
government securities and other unencumbered first-class collaterals
 It is concluded that 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. Also in terms of Systematic Risks
handled by the Bangko Sentral ng Pilipinas, 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. This is the overarching global norm in financial system
oversight. And the main responsibility of BPS is to formulate and implement policy in the areas of
money, banking and credit with the primary objective of preserving price stability.

References:

https://www.bsp.gov.ph/SitePages/AboutTheBank/AboutTheBank.aspx

https://www.bsp.gov.ph/SitePages/AboutTheBank/AboutTheBank.aspx

https://www.bsp.gov.ph/SitePages/AboutTheBank/LoansAndCredit.aspx

https://www.bsp.gov.ph/SitePages/FinancialStability/FinancialStability.aspx#MPP