Central Monetary

Authority
(Philippines)
CENTRAL MONETARY
AUTHORITY
DEFINITION
●
The entity (typically the central bank)
given the authority by the government
or parliament to control money supply
by raising or reducing interest rates,
oversees exchange rate policy and
usually also supervises the banking
sector.
CBP as CMA
Later, PD 1801 designated the Central Bank
of the Philippines as the central monetary
authority (CMA). Years later, the 1987
Constitution adopted the provisions on the
CMA from the 1973 Constitution that were
aimed essentially at establishing an
independent monetary authority through
increased capitalization and greater private
sector representation in the Monetary
Board.
CBP/BSP
●
The Bangko Sentral ng Pilipinas (BSP)
is the independent central monetary
authority of the Republic of the
Philippines. Established under the New
Central Bank Act of 1993, the BSP is
primarily mandated by law to ensure the
maintenance of price stability conducive to
a balanced and sustainable growth of the
economy.
Presidential Decree
No. 1801
ESTABLISHING THE
CENTRAL BANK OF THE
PHILIPPINES AS THE
CENTRAL MONETARY
AUTHORITY
PRESIDENTIAL DECREE NO.
1801

WHEREAS, the Constitution provides

that the National Assembly shall
establish a central monetary
authority which shall provide policy
direction in the areas of money,
banking and credit;  .
PRESIDENTIAL DECREE NO.
1801

WHEREAS, until the National

Assembly shall otherwise provide,
the Central Bank of the
Philippines, operating under
existing laws, shall function as the
central monetary authority; 
PRESIDENTIAL DECCREE NO.
1801
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by
virtue of the powers vested in me by the
Constitution, do hereby order and decree:
PRESIDENTIAL DECREE NO.
1801
Section 1.  The Central Bank of the Philippines is
hereby constituted as the central monetary
authority pursuant to Section 14, Article XV of
the Constitution. It shall provide policy direction
in the areas of money, banking and credit and
shall have supervisory authority over the
operations of banks and exercise such
regulatory authority as may be provided by law
over the operations of non-bank financial
intermediaries.
PRESIDENTIAL DECREE NO.
1801

Sec. 2.  This Decree shall take effect

immediately.
Done in the City of Manila this 16th day
of January, in the year of Our Lord,
nineteen hundred and eighty-one.
Primary Objective and
Responsibility

●
The BSP is primarily mandated by law to
ensure the maintenance of price stability
conducive to a balanced and sustainable
growth of the economy. Thus, price
stability is considered a necessary
complement, rather than an alternative, to
economic growth.
Central Bank of Philippines
Mission and Vision

As a MONETARY AUTHORITY the BSP

aims to achieve parity with
international standards and act as a
catalyst to make the Philippine
economy a globally competitive one.
The central bank also tries to make
sure that the financial system of the
country is such that Filipinos enjoy a
high standard of life.
Central Bank of Philippines
Mission and Vision
The BSP's major commitment is towards
ensuring and promoting the consistency of
prices and providing a positive leadership
that is necessary to make sure the financial
system stays strong. The bank also aims to
assist the economy in experiencing a
sustainable and balanced level of growth it
also implements the necessary monetary
policies and supervises the financial
organizations in ways that are required to
achieve the goal.
Central Bank of
Philippines Governance

The Monetary Board is the leading

authority at the BSP and performs
important functions such as
management of the financial system
and formulation and implementation of
monetary policies.
Central Bank of
Philippines Governance
●
The Governor heads the Monetary Board
and also acts as the BSP CEO. He or she is
responsible for supervising and directing the
internal administration and functions of the
bank.
●
The Monetary Sector implements and makes
the banks monetary policies. It accepts
servicing withdrawals, deposits, and provides
credit through the rediscounting facility.
PRESIDENTIAL DECREE NO.1801
Establishing the Central Bank of the
Philippines as the Central Monetary
Authority

• 1993- came up with the rudiments of a bill

for the establishment of a central bank for
the country
• 1935-1941 (commonwealth period)-
discussion about a Philippine central bank
• 1939- as required by the Tydings-Mcduffie
act, Philippine legislature passed a law
establishing a central bank. However, US
President F.D. Roosevelt disapproved it due
to strong opposition from vested interests.
PRESIDENTIAL DECREE NO.1801
Establishing the Central Bank of the
Philippines as the Central Monetary Authority

• 1944( during Japanese occupation)- A

second law was passed, but the arrival of the
American liberalization forces aborted its
implementation.
• 1946- Pres. M.Roxas instructed the Finance
Secretary to draw up a charter for a central bank.
• 1947-The commission w/c studied Philippine
Financial, monetary and fiscal problems
recommended as a shift from the dollar
exchange standard to a managed currency
system.
PRESIDENTIAL DECREE NO.1801
Establishing the Central Bank of the
Philippines as the Central Monetary Authority

• February 1948- The Central Bank Council

prepare the charter of a proposed monetary
authority, produced a draft, it was submitted
to Congress.
• June 1948- Pres. E.Quirino affixed his
signature on Republic Act No. 265, The
central Bank Act of 1948.
• November 29, 1972- Presidential; Decree
No. 72 adopted the recommendations of the
Joint IMF-CB Banking Survey Commission
PRESIDENTIAL DECREE NO.1801
Establishing the Central Bank of the
Philippines as the Central Monetary Authority

• 1973 Constitution- The National Assembly

was mandated to establish an independent
central monetary authority. Later 1801
designated the Central Bank of the Philippines
as the central monetary authority (CMA)/
• 1987 Constitution adopted the provisions on
CMA from 1973 Constitution.
• June 14, 1993- In accordance with a
provision in the 1987 Constitution, Pres.
F.V.Ramos signed into law Republic Act No.
7653, the New Central Bank Act.
PRESIDENTIAL DECREE NO.1801
Establishing the Central Bank of the
Philippines as the Central Monetary Authority

*The law provides for establishment of an

independent monetary authority to be known
as the Bangko Sentral ng Pilipinas, with the
maintenance of price stability explicitly stated
as its primary objective. The objective was
only implied in the old Central Bank charter.
The law gives the Bangko Sentral fiscal and
administrative autonomy which the old Central
Bank did not have.
• JULY 3, 1993 – THE New Central Bank Act

took effect
Under the New Central Bank Act, the BSP
performs the following functions

1. Liquidity Management- by formulating

and implementing monetary policy aimed
at influencing money supply, consistent
with its primary objective to maintain price
stability.
2. Currency Issue- exclusive power to issue
the national currency.
3. Lender for last resort- extending
discounts, loans and advances to banking
institutions for liquidity purposes
Under the New Central Bank Act, the BSP
performs the following functions

4. Financial Supervision- supervising

banks and exercising regulatory powers
over non-ban institutions performing quasi-
banking functions.
5. Management of Foreign currency
reserves- by maintaining sufficient
international reserves to meet any
foreseeable net demands for foreign
currencies in order to preserve the
international stability and convertibility of
the Philippine peso.
Under the New Central Bank Act, the BSP
performs the following functions

6. Determination of exchange rate

policy- by determining the exchange rate
policy of the Philippines
7. Being the banker, financial advisor
and official depository of the
Government, its political subdivisions and
instrumentalities and GOCCs.
End of slides….