MONEY 2.

STANDARD OF VALUE
o Money—measuring stick to measure value or worth
NATURE OF MONEY o Goods, services, assets, liabilities are all measured
➢ Latin word moneta in terms of money
o surname of Roman Goddess juno o Money measured the relative worth of goods
o refers to mint or a place for coining money and services (the common denominator/ the basis
➢ According to etymonline.com: for comparison)
o Old French monoie
o Modern French monnaie 3. STORE OF VALUE
o Means money, coin, currency or change o Value needed in the future is stored (ex. savings)
➢ “bucks”—“buchskins” o It can be saved or invested for future use
o Medium of exchange by settlers during early times
4. MEANS OF DEFERRED PAYMENT
DEFINITION o money serves as a means of deferred payment
➢ Generally accepted medium of exchange, measure of when debts are to be settled in the future
value, means of payment (Merriam-Wesbter) o As legal tender,
➢ Anything authorized by law to be generally accepted as legal • Money is acceptable in payment of debt
tender or liabilities
➢ Standard of value in the payment of goods and services • Future Payment--- money become
➢ lawful token used in society to pay goods, services, and debt means of deferred payment
➢ Miranda (2004)--- “used as a medium of exchange….widely o Deferred—postponed or held for future use (so long
acceptable payment of goods and services without as prices remain stable—buy same goods or
reference to the general standing of a person who offers it.” services)
o prices increase, creditors lose value
MONEY IS… since the owed amount buys less,
1. Medium of Exchange o prices decrease, creditors gain value as
2. Legal Tender the owed amount buys more.
3. Measure of value 5. CONVEYANCE
4. Means of payment o Means of transport or transfer
5. Standard of value o means the process of or the documents effecting
the transfer of property from one owner to
CHARACTERISTICS OF MONEY another.
o Document—money
1. SCARCITY o Process—transfer of title or ownership
o Makes something valuable o Similar to the function of medium of exchange (only
o Overabundance makes it worthless that there is a transfer of ownership)
o Rare or hard to find o Money conveys or transfers title or possession.
o Based on Law of Supply and Demand
o The harder is a thing to find, the more that thing CLASSIFICATIONS OF MONEY
becomes (why gold and silver deemed a good
choice as medium of exchange)) Paper Money
o Limited supply---metals impractical or too expensive ➢ Chinese invented printing + the use of paper money (Tang
to use Dynasty 618-906 AD)
➢ Mongolia—2nd country to begin using paper money (11th
2. DIVISIBILITY century)
o enables one to suit the medium of exchange to the ➢ Bank of Sweden—issued first paper money in EUROPE (17th
kind of transaction, big or small Century)
o quality of being broken down into smaller units ➢ REPRESENTATIVE MONEY (certain quantities of gold or
o Malleability of Metals--- desirable for coinage since silver is kept by the government to cover what has been
it cab be melted and formed into different shapes issued)--- replaced with the term FIAT MONEY
o allows currency to be tailored to different
transaction sizes by breaking it down into smaller Plastic Poylmer Money
units, making it easier to exchange ➢ Plastic money--- cash made of super resistant polymer film
➢ Polymer Money—feels like regular bill; lasts longer
3. PORTABILITY ➢ Australia—1st country to develop and use polymer notes
o Ease in handling or carrying (1988) after research and development by Commonwealth
o Allows people to bring it with them whenever, Scientific and Industrial Research Organization (CSIRO)
wherever (especially when entering into
transactions) Plastic Money
➢ Hard plastic cards in exchange transactions in place of bank
4. DURABILITY notes
o Long lasting (ex. metal since it’s almost 1. Credit Cards
indestructible) o Allows owners to buy products on credit in lieu
o Philippine Coins--- metals of cash or money
o Paper bills—80% cotton, 20% abacca o Has credit limit
o High interest rate
FUNCTIONS OF MONEY o Ex. American Express, Visa, MasterCard,
Discover
➢ Facilitate exchange of goods and services 2. Debit Cards
➢ Lessen time and effort required to carry on trade o Payments using this card are immediately
charged to the cardholder’s bank account,
1. MEDIUM OF EXCHANGE instead of paying the card at a later date
o Facilitate transfer of goods and services 3. Cash Cards
o Settle obligations o only allows withdrawal of money from ATM
o whatever commodity was used to effect transfer (Automated Teller Machine)
could be considered “money”- cowries, wampums, o can be used as DEBIT CARD
and cattle. o convenient
o Money—medium of exchange, can be used to ❖ Prepaid Cash Card
exchange for goods and servies o Gift Card/ Certificate
 ▪ Prepaid cash given as gift o Generally used by businesses and persons conducting
▪ Can be issued by financial institutionts and business
can be used on any store o Written order (drawee) issued by the maker or drawer
▪ Fully used—no value to pay someone whose name is written on the face of the
o Store Card check (payee) a certain amount of money on demand
▪ Simple credit granted by stores to (upon presentation/immediately) or at a future date (post-
encourage customers to spend more in their dated check)
store o PARTIES TO A CHECK
▪ Can be used for purchase in the same store Maker—drawer or writer of check
after being issued Drawee—the bank which is ordered to pay the
o Multi-currency Prepaid Card payee
▪ Stores money in different currencies Payee—whom the check is to be paid
▪ Can load up to six different currencies
▪ Convenient for international transactions 1. Personal Check
▪ can be used from all Visa-affiliated be drawn against their own current/checking
merchants here in the Philippines and account in the bank
abroad regardless of the currencies loaded.
2. Business Check
CLASSIFICATION OF MONEY check issued by companies/businesses
drawn on issuer’s bank checking/current
➢ Full-Bodied Money account
➢ Rerpresentative full-bodied money used for business transactions
o Issued by GOVERNMENT
▪ Token coins 3. Cashier’s Check
▪ Representative Token Money issued by the bank against its own account---
▪ Circulating promissory notes ensure availability of FUNDS
o Issued by BANKS purchased with a fee from a bank that issues
▪ Circulating promissory notes issued by the check
central bank signed by bank cashier or any bank official
▪ Circulating promissory notes issued by
other banks 4. Certified Check
▪ Demand deposits subject to check Issued by the bank certifying that the account
of the person issuing it has available funds
Full-Bodied Money bank certifies the availability of fund by
➢ money whose worth as an actual item (like gold or silver) is earmarking the corresponding amount
just as high as its value when used as currency.
➢ Money whose value as a commodity for non-monetary 5. Traveler’s check
purposes is as great as its value as money (commodity for Preprinted fixed amount check
non monetary purposes = money) PARTIES TO A TRAVELER’S CHECK
i. Issuer or obligor – the company
Representative Full-Bodied Money issuing or producing the traveler’s
➢ Usually made of paper check
➢ No significant value as commodity ii. Agent – the financial institution who
➢ represents in circulating an amount of metal with a sells the traveler’s check.
commodity value equal to the value of the money iii. Purchaser – the person buying the
➢ Ex. gold certificate traveler’s check and will use it as a form
of money
Credit Money or Fiat Money iv. Payee – the seller of goods or
➢ Money circulates at a value higher than the commodity services to be paid with the traveler’s
value of the material it's made from. (except RFBM) check.
➢ occur when the issuing authority purchases all available 4. BANK DRAFT
money material at a price significantly lower than the monetary o Issued by banks against their own account
or face value of the money it's transformed into. o Ensure availability of funds (no need to check on person
issuing)
TYPES OF MONEY ISSUED IN THE PHILIPPINES o Prevalent in the UK
o TYPES OF BANK DRAFT
➢ Standard Money—Central Bank Notes Demand Draft (sight draft) – payable on
➢ Representative Money—Treasury Certificates 1903 demand or upon sight
➢ Convertible Representative Money—Philippine Treasury Time Draft – payable sometime in the
Certificates 1903 future like post-dated check
➢ Fiat Money—Japanese War Notes Local Draft – issued by a bank in a
➢ Fiat Money—Bangko Sentral notes single country
➢ Token Coins—metallic coins International Draft – used globally or
➢ Credit Money--- Bangko Sentral Notes internationally
➢ Guerilla Notes Automatic Bank Draft (ABD)- takes out
money from the payer’s account
FORMS OF MONEY electronically at a regular intervals

1. COMMODITY MONEY 5. MONEY ORDER

o Has its own value o instrument issued generally by the post office of a country
o Has its own intrinsic value (value of commodity) ordering a sum of money to be paid to the payee
o Ex. shells, cattle o substitute of personal checks
2. CURRENCY (BILLS & COINS)
o Government issues this as legal tender in the country 6. WAREHOUSE RECEIPT (WR)
o Bills and coins are in different denominations, minted and o Covers all warehouses (public, private, bonded)
printed, by central bank o Document of title to goods
o Domestic Currency can only be used in its country of o Proof of possession or control of goods
origin
3. CHECK
 o Authorizing or purporting to authorize the possessor of the
documents to transfer or receive, either by endorsement FOUR LAYERS OF SECURITY FEATURES
or by delivery goods represented by such document
LEVEL I (8)
BSP ROLE IN MONEY PRODUCTION o Security features easily recognized by the public
without use of special instruments
BSP VISION o Look, Feel, and tilt elements enumerated below
THE BSP AIMS TO BE RECOGNIZED GLOBALLY AS THE o “Feel the paper and embossed prints”
MONETARY AUTHORITY AND PRIMARY FINANCIAL SYSTEM o The note is printed on a special kind of paper (cotton &
SUPERVISOR THAT SUPPORTS A STRONG ECONOMY AND abaca) using printing techniques to make details
PROMOTES A HIGH QUALITY OF LIFE FOR ALL FILIPINOS. embossed
o ROUGH when you run your fingers through it
BSP MISSION o Watermark, security fibers, security threads and iridescent
TO PROMOTE AND MAINTAIN PRICE STABILITY, A STRONG band (NDS only) were added on the paper in production
FINANCIAL SYSTEM, AND A SAFE AND EFFICIENT PAYMENTS AND process
SETTLEMENTS SYSTEM CONDUCIVE TO A SUSTAINABLE AND
INCLUSIVE GROWTH OF THE ECONOMY.
1. Embossed Prints
OVERVIEW OF FUNCTIONS AND OPERATIONS ▪ Embossed or raised print nature of the ink
deposition + quality of cotton-based paper=
OBJECTIVES: Unique tactile effect
THE BSP’S PRIMARY OBJECTIVE IS TO MAINTAIN PRICE ▪ Can felt over the words “REPUBLIKA NG
STABILITY CONDUCIVE TO A BALANCED AND SUSTAINABLE PILIPINAS”, denominational value in text,
ECONOMIC GROWTH. THE BSP ALSO AIMS TO PROMOTE AND signatures, and value panels (lower right
PRESERVE MONETARY STABILITY AND THE CONVERTIBILITY corner of obverse (front)
OF THE NATIONAL CURRENCY
2. Asymmetric Serial Number
RESPONSIBILITIES: ▪ Alpha numeric characters at lower left and
THE BSP PROVIDES POLICY DIRECTIONS IN THE AREAS OF upper right corners of the note
MONEY, BANKING AND CREDIT. IT SUPERVISES OPERATIONS OF ▪ Bears one or two prefix letters
BANKS AND EXERCISES REGULATORY POWERS OVER NON-BANK ▪ 6-7 digits (font increasing in size and
FINANCIAL INSTITUTIONS WITH QUASI-BANKING FUNCTIONS. thickness)

BSP FUNCTIONS ALL OF WHICH RELATE TO STATUS AS

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. 3. Security Fibers
▪ Visible red and blue fibers embedded on the
• CURRENCY ISSUE. the BSP has the exclusive power to issue the paper
national currency. all notes and coins issued by the BSP are fully ▪ Randomly scattered on the face and back of
guaranteed by the government and are considered legal tender for all the note
private and public debts.

• LENDER OF LAST RESORT. the BSP extends discounts,s loans and

advances to banking institutions for liquidity purposes.

• FINANCIAL SUPERVISION. the BSP supervises banks and exercises

regulatory powers over non-bank institutions performing quasi-banking ▪
functions.
4. Watermark
MANAGEMENT OF FOREIGN CURRENCY RESERVES. ▪ Shadow image of the portrait with the
the BSP seeks to maintain sufficient international reserves to meet any highlighted denominational value seen against
foreseeable net demands for foreign currencies in order to preserve the the light from either side of the bank note
international stability and convertibility of the Philippine peso.

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 central 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. ▪

5. See-through Mark
▪ Pre-Hispanic script (Baybayin) at the lower
SECURITY FEATURES OF MONEY
right corner of the face of the note slightly
above the value panel (seen against the light)
Security Features of the New Generation Currency (NGC)
▪ Script means “PILIPINO”
➢ Banknotizer—highly trained artist on currency design concept
➢ Designs executed by the Filipino artists have to be adjusted by
the banknotizer (process of Banknotization)
o Designing currency that is resistant to counterfeiting
▪
DESCRIPTION OF DESIGNS OF THE NEW GENERATION
CURRENCY NOTES 6. Concealed Value
 ▪ denominational value at the smaller version environment against E.coli bacteria and aspergillus niger
portrait at the upper left portion of the note fungus
▪ rotate 45 degrees to make it visible
4 FILIPINO ADJECTIVES FOR NGC

1.
▪
2.
7. Security Thread (Embedded or Windowed)
▪ Embedded thread that runs vertically across
the width of 20- and 50- piso notes when
viewed against the light. Also, the stitch-like
metallic thread on the 100-,200-, 500- and 3.
1000- piso notes which changes color from
red to green and bears the cleartext of “BSP”
on the reverse both in repeated series.
4.
Matibay (strong)
o Contains Philippine abaca (known for strength and
versatility)
i. Reflection of resilience of our economy
amidst challenegs
Makulay (colorful)
o Vibrant colors---colorful history of our nation
i. Mirror the happy and loving Filipino
disposition even when faced with
adversities
Maganda (beautiful)
o Abundant in natural resources and wonders
o Natural resources—worth preserving as our refuge
against hunger, calamity and boredom
Malinis (clean)
o Each NGC note was given hygienic treatment
o Makes it hostile for the growth of E.coli bacteria and
Aspergillus niger fungus

IDENTIFICATION OF THE SALIENT FEATURES OF MONEY

ACTIVITY
▪
1. Check the complete parts of a check
8. Optical Variable Device (OVD) Patch
▪ Found only in 500- and 1000- piso notes
▪ patch is a reflective foil, bearing the image of
the Blue-naped parrot for 500-piso/clam with
South Sea pearl for 1000-piso, changes color
from red to green when the note is rotated
90 degrees.

▪
9. Optically Variable Ink (OVI)
▪ Found only in 1000 pesos KINDS OF CHECK
▪ embossed denominational value at the
lower right corner of the face of the note Postdated Check
changes color from green to blue when ✓ Future date written not current
viewed at different angles. ✓ Ensure funds are available on a certain date

▪ ✓ Has two diagonal lines across the top left corner
LEVEL II
o Security features recognizable by professional cash
handers/bank tellers using magnifying lens or UV light
(Ex. fluorescent features and microprinting)
LEVEL III
o Hidden or convert security features that are reserved for
the use of the BSP
LEVEL IV
o forensic security features that require special laboratory
examination procedures and equipment for
identification
o most relevant establishing the authenticity of a banknote in
the course of court proceedings
Stale Dated
✓ Past expiration date; (6 months/ 180 days) from the date
issued
✓ Cannot be accepted by banks for processing
Outdated
✓
Crossed Check
✓ Security feature
✓ Check can’t be cashed directly but MUST BE DEPOSITED
Bearer Check
✓ payment is made to the person bearing or carrying the cheque
✓ enable the holder to cash or deposit the cheque without any
requirement for identification or endorsement
Manager’s Check
✓ secure check that bank issues to purchasers
✓ a check drawn by the bank's manager upon the bank itself
✓ designed to immediately release funds (equivalent to cash)

Other Features of the NGC

➢ BSP—first to adopt the latest OVD patch security feature
in the NGC
➢ OVD patched used in NGC has characteristic color
permutation different from the OVD patch seen in foreign
notes
➢ NGC is first currency note in ASIA to incorporate hygienic
treatment of the substrate to make it a hostile