BRIEFLY DISCUSSED THE FOLLOWING QUESTIONS BELOW:

1. Explain the development of banking in the Philippines.

The Philippines' first systematic credit system was established during the

Spanish colonial period. Institutions have been established. This was the OBRAS

PIAS, a philanthropic foundation active during the Spanish period. The name

literally means "piety actions" in Spanish, and a percentage of personal wealth

was directed to Church charities like the Obras Pias. The funds will be used for

charitable, religious, and educational purposes as specified by the contributors.

Some of the funds, on the other hand, were managed by confraternities that used

their funds for secular purposes such as underwriting galleon ships. Act No. 52

was passed by the First Philippine Commission placing all banks under the

Bureau of Treasury. The Insular Treasurer was authorized to supervise and

examine banks and banking activities.

Particular group of Filipinos were trying to conceptualize a central bank for the

Philippines.Resulted from a careful understanding of the economic provisions of

HARE HAWES CUTTING BILL. During February 1929, the Bureau of Banking

under the Department of Finance took over the task of banking supervision. In

1939, a bill establishing a central bank was drafted by Secretary of Finance

Manuel Roxas and approved by the Philippine Legislature. However, the bill was

returned by the US government, without action, to the Commonwealth

Government. February 1948,President Manuel Roxas submitted to Congress a

bill “Establishing the Central Bank of the Philippines, defining its powers in the
 administration of the monetary and banking system, amending pertinent

provisions of the Administrative Code with respect to the currency and the

Bureau of Banking, and for other purposes. Moreover, 15 June 1948, the bill was

signed into law as Republic Act No. 265 (The Central Bank Act) by President

Elpidio Quirino. On the 3rd of January 1949, the Central Bank of the Philippines

(CBP) was inaugurated and formally opened with Hon. Miguel Cuaderno, Sr. as

the first governor.

Furthermore, on July 3, 1993, the Bangko Sentral ng Pilipinas (BSP) was

established to replace the CBP as the country’s central monetary authority. The

BSP actually started out as the Central bank of the Philippines established on

January 3, 1949 as the Philippines’ Central Monetary Authority. In accordance

with the pursuant of the 1987 constitution, the Central Bank of the Philippines

was re-chartered in July 3, 1993 and was renamed as the Bangko Sentral ng

Pilipinas.

2. Briefly state the PNB story.

Philippine National Bank (PNB) was incorporated on July 22, 1916 to engage in

the general commercial banking business. PNB provides a range of banking and

financial services to corporate, middle-market, small and medium enterprises and

retail customers, including overseas Filipino workers, as well as to the Philippine

national government, national government agencies, local government units and

government-owned and -controlled corporations in the Philippines.

 PNB's principal commercial banking activities include deposit-taking, lending,

trade financing, foreign exchange dealings, bills discounting, fund transfers,

remittance servicing, asset management, treasury operations, comprehensive

trust services, retail banking and other related financial services.

As of December 31, 2020, PNB has 716 branches and 1,710 automated teller

machines nationwide. PNB also maintains 70 overseas branches, representative

offices, remittance centers and subsidiaries across Asia, Europe, the Middle

East, and North America.

3. Define universal banking.

Universal banking can be defined as a banking system that offers a wide range

of banking and financial services (like insurance, development banking,

investment banking, commercial banking, and other financial services) in

comparison to traditional banking institutions; in simple terms, it can also be

understood as a combination of all three services that is retail banking,

investment banking, and wholesale banking. This system offers asset

management, deposits, payment processing, investment advisory, underwriting,

securities transactions, financial analysis, merchant banking, factoring, mutual

funds, credit cards, auto loans, insurance, housing finance, retail loans, etc.
4. Give some reasons why universal banking has been adopted.

● They offer the widest variety of banking services among financial institutions.

In addition to the function of an ordinary commercial bank, universal banks

are also authorised to engage in underwriting and other functions of

investment houses, and to invest in equities of non-allied undertakings.

● Universal banking offers all financial products and services under one roof. It

saves transaction cost and time.It also increases the speed of work.Hence it

is beneficial to bank as well as customer.

● Easy Marketing, a bank with an established brand name can easily use its

existing branches and staff to sell the other financial products like insurance

policies, mutual fund plans without spending much effort on marketing.

● Universal banks hold equity shares of many companies .These companies

can easily get investors from the public to invest in their business . This is

due to other investors having full confidence and faith in the universal banks.

5. What are some of the advantages of universal banking?

● Economics of scale- Universal banking results in greater economic efficiency in

the form of low cost,higher output and better products.

● Profitable Diversions- The banks can utilize its existing skill in single type of

financial services in offering other kinds by diversifying the activities. Therefore, it

 involves lower cost in performing all types of financial functions by one unit

instead of other institutions.

● Resources Utilization- A bank possesses all types of information about the

existing customers which can be utilized to perform other financial activities with

the same customer.

● One-stop Shopping- One-stop shopping is beneficial for the bank and its

customers as it saves a lot of transaction costs by increasing the speed of

economic activities.

● Investors trust- Universal banks hold equity shares of many companies .These

companies can easily get investors from the public to invest in their business .

This is due to other investors having full confidence and faith in the universal

banks.

6. Some critics say that universal banking favors multinational corporations.

Do you agree? Explain.

Yes, I agree. Since universal banks cater everything, it won’t be difficult for them

to cater big companies as well as multinational corporations. Universal banks can

mostly handle big companies more than commercial or any banks. Multinational

companies are very significant for a developing country like the Philippines

because they promote the growth of trade due to the bulk investment of foreign

capital in a country. Direct foreign investment in the industrial sector reduces the
 amount of commercial debt of a country. Also, they bring employment

opportunities and new technologies that spillover to domestic firms. Furthermore,

MNCs often benefit from government subsidies, which could in future be linked to

investment in local firms. Thus, universal banks like BDO favors them because

there are other banks like retail banks, investment banks,community

development banks,credit unions, commercial banks etc.that can handle local

smaller corporations or companies.

7. Evaluate our financial system. Is it effective or not?

As I've noticed, our financial system isn’t really effective. As years have

passed, we are still a developing country. This is because of not so efficient ways

utilized by our government. A lot of sectors are affected, resulting in a general

effect on the country. The financial ecology in the area is particularly prone to

exploitation. According to the research, people have been arrested for corruption,

drug trafficking, investment fraud and swindling, as well as violations of the

Electronic Commerce Act and different cybercrimes. As I read this report, all I

can say is that our financial system is not very stable, with too many loopholes. In

truth, the Philippines' weak financial system is rather obvious amid a crisis,

particularly during this epidemic. The Philippines today owes a large amount of

money to other countries, which was used to finance the country and provide
assistance to the people during the lockdowns. See? Our country lacks sufficient

funds for its citizens, and money circulation is in poor condition.