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PHILIPPINE

FINANCIAL
SYSTEM

BANGKO SENTRAL
NG PILIPINAS
AND THE BANKING
INDUSTRY

established on 3 July 1993 pursuant to


the provisions of the 1987 Philippine
Constitution and the New Central Bank
Act of 1993

BSP enjoys fiscal and administrative


autonomy from the National Government
in
the
pursuit
of
its
mandated
responsibilities.

Maintain

price stability conducive to a


balanced
and
sustainable
economic
growth.

Promote

and preserve monetary stability


and the convertibility of the national
currency.

Two Objectives of BSP

The

BSP provides policy directions in the


areas of money, banking and credit.

It

supervises operations of banks and


exercises regulatory powers over nonbank financial institutions with quasibanking functions.

Responsibilities of BSP

BSP Functions According to


the New Central Bank Act
Liquidity

Management
Currency issue
Lender of last resort
Financial Supervision
Management of foreign currency reserves
Determination of exchange rate policy
Other activities

The BSP's Organizational


Structure

1.

Issue rules and regulations it considers


necessary for the effective discharge of
the responsibilities and exercise of the
powers vested in it;

2. Direct the management, operations, and


administration of Bangko Sentral,

Major functions of the Monetary


Board

3.Establish a human resource management


system which governs the selection,
hiring, appointment, transfer, promotion,
or dismissal of all personnel;
4.Adopt an annual budget for and authorize
such expenditures by Bangko Sentral
5. Indemnify its members and other officials
of Bangko Sentral, against all costs and
expenses reasonably incurred

Advocacies

BSP Initiatives on Microfinance


To provide the enabling policy and
regulatory environment,
To increase the capacity of banking
sector on microfinance operations
To advocate the development of
sound and sustainable
microfinance operations.
Anti-Money Laundering
Financial Literacy

Economic

Information
enhance public awareness on the role of
the BSP in the Philippine economy, and
help manage inflation expectations and
reputational risks.
The BSP initiatives to improve the
Overseas Filipinos (OFs) remittance
environment
Improving access to financial services
Encouraging OFs and their families to
increase savings and investment
Promoting financial learning among OFs
and their beneficiaries

The

primary objective of BSP's monetary


policy is to promote a low and stable
inflation conducive to a balanced and
sustainable
economic
growth.
The
adoption of inflation targeting framework
for monetary policy aimed at achieving
this objective.

Monetary Policy

1.

Open Market Operations


2. Acceptance of fixed-term deposits
3. Standing Facilities
4. Reserve requirements
regular or statutory reserves
liquidity reserves

Monetary Policy Instruments


used by the BSP

The Monetary Board decided to keep the BSPs


key policy interest rates steady at 4 percent for
the overnight borrowing or reverse repurchase
(RRP) facility and 6 percent for the overnight
lending or repurchase (RP) facility. The interest
rates on term RRPs, RPs, and special deposit
accounts (SDAs) were also left unchanged.

The Inflation Target


is an approach to monetary policy that
involves the use of a publicly announced
inflation target set by the Government, which
the BSP commits to achieve over a two-year
horizon

Rediscounting
Overnight

Clearing Line
Emergency Loans
Lending Rates
Credit Information System (CRIS)
Electronic Rediscounting System
Credit Surety Fund Program

Loans and Credit Operations

BANKS

(BANKING SECTOR)

Non-bank

financial
institutions

COMPONENTS OF THE FINANCIAL


SYSTEM

Expanded

commercial banks or universal

banks
Commercial banks
Specialized banks
Thrift banks
Small private banks

Types of banks

Offers

wide variety of banking services


among financial institutions
They can engage in:
Equity investments in non-allied undertaking
Up to 100% equity investments in fiancial
intermediaries other than commercial banks

EXPANDED COMMERCIAL BANKS


OR UNIVERSAL BANKS

Constitutes

the bulk of the banking

system
Accepts deposits, withdrawals, lending
etc.
Discount and negotiate promissory notes,
drafts, bills of exchange etc.

COMMERCIAL BANKS

Development

Bank of the Philippines

Provides long term credit to finance private


development projects
Land

Bank of the Philippines

Financial arm of the land reform program

GOVERNMENT BANKS

Thrift

Bank Act of 1995 provided for the


establishment, operation, and supervision
of thrift banks to include savings and
mortgage banks, private development
banks, and stock savings and loan
associations
SMB (Savings and Mortgage Banks

THRIFT BANKS

Rural

banks and cooperatives


Private development banks

SMALL PRIVATE BANKS