Financial Market 
is a market or place It is where the bulk of exchange
where buyers and sellers trade
commodities, foreign exchange, and
financial securities.
It is also called as "Wall Street" or “capital
market".
Finance is a term for matters regarding the
creation, study and management of
money and investments.
Market refers to a place where potential
buyers and sellers get together to trade
goods and services.
TYPES OF FINANCIAL MARKETS
1. Capital Market - raising of capital on
a long-term basis, generally over
1 year.
It consists of a primary and
a secondary market.
Two main subgroups:
Stock market - trades shares of
ownership of public companies.
 Bond market - offers opportunities
for companies and the government
to secure money to finance a
project or investment. Investors
buy bonds from a company, and the
company returns the amount of the
bonds within an agreed period, plus
interest.
Primary Market - also known as “new issue
market”. Where securities are being created
and traded for the first time without using
any intermediary.  and options used to help control
 Secondary market - also known as
“aftermarket”. the place where investors
purchase previously issued securities like
stocks, bonds, futures and options from
other investors.
trading occurs and refers to the “stock
market”. 
Over-the-counter traded stocks - traded
directly between dealers over the
telephone or by computer (online). Also
called as “Unlisted stocks”.
2. Money Market - to manage their
liquidity positions through lending
and borrowing short-term
loans, under 1 year.
One can borrow money within a quite short
period of time via a standard instrument, the
so-called “call money”. These are funds
borrowed for one day, from 12:00 PM today
until 12:00 PM on the next day.
3. Commodity Market - where traders
and investors buy and sell natural
resources or commodities such as
corn, oil, meat, and gold.
Hard Commodities are raw materials
typically mined, such as gold, oil, rubber,
iron ore etc.
Soft Commodities are typically grown
agricultural primary products such as
wheat, cotton, coffee, sugar etc.
4. Derivatives market - A market
involves derivatives or
contracts whose value is based on
the market value of the asset being
traded.
It facilitates the trading in financial
instruments such as futures contracts
financial risk. 
FUNCTIONS OF THE MARKETS
1. It puts savings into more productive
use.
2. It determines the price of securities.
 3. It makes financial assets liquid.  Credit unions

4. Lowers the cost of transactions.  Finance firms

IMPORTANCE OF FINANCIAL MARKETS

 Financial markets provide a place
where participants like investors and
debtors, regardless of their size, will
receive fair and proper treatment.

 They provide individuals,

companies, and government
organizations with access to capital.

 Financial markets help lower the

unemployment rate because of the
many job opportunities it offers. 
WHAT ARE FINANCIAL MARKET
(Corporate Finance, 2021)
INSTRUMENTS?
It is real or virtual document representing a
WHAT ARE FINANCIAL INSTITUTIONS? legal agreement involving any kind of
They are corporations that are responsible monetary value.
for the supply of money to the
market through the transfer of funds from 3 TYPES OF FINANCIAL INSTRUMENTS
investors to the companies in the form of
 Money market instruments
loans, deposits and investments.

It also regulates the control and supply of  Capital Market Instruments

money in the market and also protect
consumers.  Hybrid Instruments

Financial Intermediaries - move WHY IS IT IMPORTANT TO STUDY

funds from parties with excess capital to
parties needing funds.
TYPES OF FINANCIAL INSTITUTIONS
 Commercial banks – biggest type
of bank we have
 Trust companies
 Investment banks
 Brokerage firms
 Insurance companies
 Asset management funds
companies
FINANCIAL MARKET? THE FOLLOWING
ARE THE REASONS:
 An efficient and well-functioning
market is a key factor to produce
higher economic growth
 Financial markets, such as bond and
stock markets, are crucial for an
economy to grow.
 It promotes greater economic
efficiency by providing efficient and
productive use for funds as it
channels funds from savers to
investors.
  It has effects on personal wealth,
behavior of businesses and
consumers.
 It defines the cyclical performance of
the economy (FBS Markets Inc,
2021)
Banking – a business activity of accepting
and safeguarding money owned, then
lending out this money in order to earn a
profit.
“Banking means transacting business with a
bank; depositing or withdrawing funds or
requesting a loan etc.”
FUNCTIONS OF A BANK
1. Primary or Main Function - are
Accepting deposits and Lending
loans:
ACCEPTING DEPOSITS
 Fixed deposits - deposits mature
after a considerable long period like
1 year or more than that the rate
of interest is fixed. (e.g. time
deposit)
 Current A/C deposit - mainly
maintained by business community
to facilitate frequent transaction with
big amounts. (pwede mag transact
nang more than 50k) (more on
companies)
 Savings bank A/C - a kind of
demand deposits which is generally
kept by the people for the sake of
safety.
 Recurring deposit A/C - In case of
recurring deposit the fixed amount is
deposited in a bank every month for
a fixed period of time.
LENDING LOANS
 Call loans - These loans are
called back at any time.
Normally, these loans are taken
by bill brokers or stock
brokers.
 Short term loans - These are
sanctioned for a period up to 1
year. (normally individuals)
 Medium term loans - These are
sanctioned for the period
varying between 1 and 5 years.
 Long Term Loans - These loans
are sanctioned for a period of
more than 5 years it includes:
 Overdraft - The bank grants
overdraft facility to its reliable
and respectable depositors.
(go beyond the transactions, e.g.
pag nag file ng bankruptcy)
 Cash credit - Under this facility,
the bank allows the borrower to
withdraw cash against certain
security. (e.g. credit card)
 Bills of Exchange - The bank
provides funds to their customers
by purchasing or discounting bills
of exchange.
2. Secondary Function - The banks
also provide financial services to
the corporate sector and
business and society as follows:
Merchant Banking - is an
organization which underwrites
 securities for companies advises in
various activities.  financial and economic stability of country.
Leasing - It refers to the renting
out of immovable property by the
bank to the businessmen. (e.g.
buildings)
Mutual funds - to mobilize the
savings of the general public and
invest them in stock market and
money market.
Venture Capital (VC) is financial
capital provided to early-stage, high-
potential, high risk, growth start-up
companies.  The venture capital
fund makes money by owning equity
in the companies it invests in, which
usually have a novel technology or
business.
Automated Teller Machine (ATM) - also
known as cash point. The customers can
withdraw money easily and quickly 24 hours
a day.
Telebanking /Internet Banking - is a
throwback when people would call into a
central number at their bank/financial
institution in order to get balance. (similar
to mobile banking where you can manage
your finances)
Credit cards - allow a person to buy goods
and services up to a certain limit without
immediate payment. The amount is paid
to the shops, hotel, etc. by the commercial
banks.  authorize such expenditures by
Locker Service - lockers are provided to
the public in various sizes on payment of
fixed rent. (e.g. to safekeep the jewelleries,
land titles, anything that has value)
What is a Central Bank?
The bank which is responsible for the
For The Philippines: Bangko Sentral ng
Pilipinas (BSP)
What are the functions of Bangko Sentral
ng Pilipinas (BSP)
 It is a Government’s bank in a
banker’s bank.
 Lender of last resort
 Liquidity Management
 Currency Issue – providing the
printing of the money and the
designs
 Financial Supervision – they are
supervising anything about finances
and it has to have the approval of
BSP
 Management of Foreign Currency
Reserves
 Determination of Exchange Rate
Policy
THE MONETARY BOARD
Chairman:
 Felipe M. Medalla (pumipirma ng
pera natin) (Duterte ad.)
Members:
 Carlos G. Dominguez III
 Benjamin Diokno (previously)
 Peter B. Favila
MAJOR FUNCTIONS OF CHAIRMAN AND
MONETARY BOARD
1. Issue rules and regulations
2. Direct management, operations, and
administration of BSP
3. Establish a human resources
management system.
4. Adopt an annual budget and
BSP.
5. Identify its members and other
officials of BSP.
THE GOVERNOR – the one who
signed the paper notes (pera) and is
 the chief executive of BSP and
required to direct and supervise the
operations and internal administration of
BSP.
GOVERNOR’S DUTIES AND
RESPONSIBILITIES
1. Prepares the agenda
2. Executes and administers
policies and measures
3. Render opinion, decision, or
ruling
4. Signs contracts
5. Represents the Monetary Board
and BSP
ADVOCACIES OF THE BSP
The BSP has advocated projects on poverty
alleviation, anti-money laundering and
public financial literacy.
INTERNATIONAL FINANCIAL BODIES
AND FOREIGN AID
They put a great deal into helping,
particularly on the development side
through foreign aid.
INTERNATIONAL FINANCIAL BODIES:
World Bank – an international institution
that provides financial aid and technical
assistance to developing countries.
International Monetary Fund – a
specialized agency of the UN, to promote
international monetary cooperation.
Foreign Loan Providers – provide
development loans or credit to less
developed countries or LCDs.
CRITICISMS OF FOREIGN AID:
1. Too much dependency
2. Too much intrusion
3. Too much bureaucracy
4. Too much corruption
It is the responsibility of Bangko Sentral ng
Pilipinas to administer the monetary,
banking, and credit system of the republic
as embodied in Section 2, Articles of the
amended Republic Act 2656.
WHAT IS THE REASON WHY BSP
CANNOT PRODUCE MORE THAN WHAT
WE NEEDED?
 Because our economic system will
not be balanced. It will lead to
overprices and the value of the
money will be useless.
Money - something which has value and
can be used for exchange.
Every country has its own money and
design because it used for exchange of
goods and services.
During the Galleon Trade, the main point
of transactions are in forms of bullions or
goods.
FEATURES OF MONEY
1. It eases transactions
2. Medium of exchange
o Easily standardized
o Widely accepted
o Divisible, so that it is easy to
make change
o Easy to carry
o Must not be perishable
3. Store of value
o transfers purchasing power
from the present to the future
4. Unit of account
o the common unit by which
everyone measures prices
and values.
Philippine money (banknotes made - Palm Civet from the Cordilleras that
mainly of 80% cotton and 20% abaca.)
produce one of the best coffee varieties in
1000 PESOS POLYMER BANKNOTE the world, the Alamid coffee.
Security Features:
 Sampaguita Clear Window

 Serial Numbers 50 Peso

 Shadow Thread President Sergio Osmena, who led

 Vertical Clear Window our country during the critical stage

at the end of World War Two as

 Metallic Features
well as our transition to an
Resistance to Water, Oil, Dirt, and General
wear and tear.
independent nation.
20 PESOS NEW GENERATION
CURRENCY COIN - Taal Lake home of the world's
 Microtext (Republika ng Pilipinas)
 Year mark (2019) smallest active volcano, and the
 Mint mark (baybayin)
Maliputo fish that is unique to the
 BSP letters located in 6 angles
 Logo of BSP, Malacanan palace,
Nilad plant (back of the coin) place.
pinagmulang ng kabisera ng bansa
ang maynila
 Parte ng new generation currency
coin series 100 Peso
Manuel L. Quezon – face of the coin
- President Manuel Roxas, who
-first president of the Philippine
commonwealth prioritized the crafting of a central

-nagsulong ng paggamit ng wikang bank charter and provided the

pambansa
leadership for the reconstruction of

our country from the devastation of

20 Peso
the Second World War.
- President Manuel L. Quezon
- Mayon Volcano, the near perfect
- Banaue Rice Terraces
cone shaped and the butanding or
– declared as World Heritage Site
whale shark, the largest living fish
pieces in the world today.

200 Peso 1000 Peso

- President Diosdado Macapagal - the new 1000 peso honors our war

who started land reform and heroes, Chief Justice Jose Abad

restored the celebration in Santos, who was murdered for

Philippine independence to June refusing to cooperate with

12th. Japanese forces. Girl Scouts of the

- Chocolate Hills in Bohol and tarsier Philippines founder Josefa Llanes

Escoda, educator advocate of

500 Peso women suffrage and civic leader

- celebrates the Champions of who showed extraordinary courage

Philippine democracy, Senator by helping prisoners of war.

Benigno Aquino junior, who stood Brigadier General Vicente Lim, the

up against martial law and first Filipino West Point graduate

President Corazon Aquino, our first who directed gorilla activities even

woman president who restored from his hospital bed.

democracy after the historic and - Tubbataha Reefs Natural Park

peaceful people power revolution. declared by UNESCO as a World

- 8 kilometer Puerto Prinsesa Heritage Site in 1993 and the world

Subterranean River National Park famous South Sea Pearl.

declared in 1999 as a UNESCO World

Heritage Site and the blue-naped New 1000 Peso Bill

parrot -Polymer banknote

-Sampaguita clear window

-serial numbers History of the Philippine Peso

-shadow thread -paper currency was first used in the mid-

19th century under Spanish rule
-vertical clear window
-with the establishment of the central bank
-metallic features of the Philippines in 1949 greast filipinos
appeared on banknotes, the English series
-blue iridescent figure
-affirmed our independence
-polymer substrate
In the 1960’s, filipino series, key events and
-tactile dots place in the history appeared

-embossed prints 70’s, ang bagong lipunan stamped in the

-flying eagle
-enhanced value panel
-in correlation with the previous pandemic,
polymer banknote has proven to contain
viruses for a shorter period of time unlike
the existing thousand-peso bill (sanitized
with less risk of damage)
-lesser carbon footprint
new bills
New design series was launched After the
philipines power revolution 1986 along wqiht
the 5h peso bill kung saan andun si benigno
aquino jr. and thousand-peso bill
Bsp was created in 1993 central monetary
authority
Money shifted from cotton linen to cotton
abacca

-recyclable etc. When printing the money

-lasts 2.5-5 times longer than paper Department of economic research –

banknotes determines currency demand

- resistant to water, dirt, tear, etc.
- more cost-effective
- rich culture; flora and fauna
Security plant complex – determines the
materials needed to produce money
When the banknotes designs are changed
the president’s approval is required

- sampaguita Special security paper is the material of

banknotes composing 80% cotton and 20%
Philippine abacca
- south sea pearl tubbataha reefs natural
park
15-20 colors
-t’nalak weave design
Intaglio printing

Bundles of 1000 pcs each

After printing delivered to currency
management groups then to banks, then
economy (our wallets)

Price stability is the reason why we can’t

just print money