BANKING IN

THE
PHILIPPINES
Banking and Financial Institutions
OUTLINE OF THE
DISCUSSION
1) The History of Banking in the Philippines.

2)The Central Bank of the Philippines (Bangko

Sentral ng Pilipinas)
3)Duties, functions and Operations of the
Bangko Sentral ng Pilipinas.
4) Financial Institutions and objectives.
 I. The
History
IN THE YEAR 1900

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.
 IN
1933
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.
 IN FEBRUARY OF
1929
The Bureau of Banking under the
Department of Finance took over the task
of banking supervision.
 IN
A bill establishing a central bank was drafted by Secretary of
1939
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.
15 June
1948
The bill was signed into law as Republic Act No. 265 (The
Central Bank Act) by President Elpidio Quirino.
 3 January
1949
The Central Bank of the Philippines (CBP) was inaugurated
and formally opened with Hon. Miguel Cuaderno, Sr. as the
first governor.
3 July
1993
The Bangko Sentral ng Pilipinas (BSP) was
established to replace the CBP as the country’s
central monetary authority.
BANGKO SENTRAL NG
PILIPINAS
The Bangko Sentral ng Pilipinas (BSP) is the central
bank of the Republic of the Philippines. It was
established on 3 July 1993 pursuant to the provisions
of the 1987 Philippine Constitution and the New
Central Bank Act of 1993.
The BSP took over from the Central Bank of
Philippines, which was established on 3 January
1949, as the country’s central monetary authority.
The BSP enjoys fiscal and administrative autonomy
from the National Government in the pursuit of its
mandated responsibilities.
 BANGKO SENTRAL NG
PILIPINAS
VISION MISSION
The BSP aims to be a world-class BSP is committed to promote and
monetary authority and a catalyst for maintain price stability and provide
a globally competitive economy and proactive leadership in bringing about
financial system that delivers a high a strong financial system conducive to
quality of life for all Filipinos. a balanced and sustainable growth of
the economy. Towards this end, it shall
conduct sound monetary policy and
effective supervision over financial
institutions under its jurisdiction.
 Functions and
OBJECTIVES Operations
The BSP’s primary objective is to maintain price stability
conducive to a balanced and sustainable economic growth. The
BSP also aims to promote and preserve monetary stability and
the convertibility of the national currency
 Functions and
Operations
RESPONSIBILITIES
The BSP provides policy directions in the areas of
money, banking and credit. It supervises operations of
banks and exercises regulatory powers over non-bank
financial institutions with quasi-banking functions.
Under the New Central Bank Act, the BSP performs the
following functions, all of which relate to its status as
the Republic’s central monetary authority:
 Functions and
Liquidity Operations Management

formulates and implements monetary policy aimed

at influencing money supply consistent with its
primary objective to maintain price stability.
Currency issue
has the exclusive power to issue the national currency.
All notes and coins issued by the BSP are fully
guaranteed by the Government and are considered legal
tender for all private and public debts.
 Functions and
Operations
Lender of last resort
The BSP extends discounts, 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
 Functions and
Operations
Management of foreign currency reserves

The BSP seeks to maintain 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.
 Functions and
Determination ofOperations
exchange rate policy
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 Sentral 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.
 GOVERNANCE OF THE
BANK
THE MONETARY BOARD
exercises the powers and functions of the BSP, such as the
conduct of monetary policy and supervision of the financial
system. Its chairman is the BSP Governor, with five full-
time members from the private sector and one member
from the Cabinet.
 GOVERNANCE OF THE BANK

Alfredo C. Antonio, Felipe M. Medalla, Armando

L. Suratos, Juan D. De Zuñiga, Jr., and Valentin A.
Araneta. (Jim Guiao Punzalan)
 GOVERNANCE OF THE
THE GOVERNOR BANK
Is the chief executive officer of the BSP and is required to direct and supervise the
operations and internal administration of the BSP.
A deputy governor heads each of the BSP's operating sector as follows:
Monetary Stability Sector takes charge of the formulation and implementation of the
BSP’s monetary policy, including serving the banking needs of all banks through
accepting deposits, servicing withdrawals and extending credit through the rediscounting
facility.
Supervision and Examination Sector enforces and monitors compliance to banking
laws to promote a sound and healthy banking system.
Resource Management Sector serves the human, financial and physical resource
needs of the BSP
GOVERNANCE OF THE
BANK
BSP’S IN THE
PHILIPPINES
BSP MAIN COMPLEX
The BSP Main Complex in Manila houses
the offices of the Governor, the
Monetary Board and the different
operating departments/ offices. The
Complex has several buildings, namely:
5-Storey building, Multi-storey building,
the EDPC building and the BSP Money
Museum, which showcases the Bank's
collection of currencies
 BSP’S IN THE
PHILIPPINES
BSP SECURITY PLANT COMPLEX
The Security Plant Complex which is
located in Quezon City houses a banknote
printing plant, a securities printing plant, a
mint and a gold refinery. The banknote
printing plant and the mint take care of
producing currency notes and coins,
respectively.
BSP’S IN THE
PHILIPPINESThe BSP has three regional
performing
offices operations,
administration,
cash cash loans
rediscounting, bank supervision
and and
gold buying operations. These
regional offices are located in La
Union, Cebu City and Davao City and
19 branches all over the Philippines.
 FINANCIAL
INSTITUTIONS
WHAT ARE FINANCIAL INSTTITUTIONS?
- government agency or privately owned entity that collects funds from the
public, and from other institutions, and invests those funds in financial
assets, such as loans, securities, bank deposits, and income generating
property.
act as intermediaries between saver and borrowers and are differentiated
by the way they obtain and invest their funds.
 FINANCIAL
INSTITUTIONS
IDENTIFIED TYPES OF FINANCIAL INSTITUTIONS:
1) Depository financial institutions-
◦any group that includes commercial banks, savings and loan
associations, mutual savings banks, and credit unions-conduct
business by accepting public deposits, which are insured by the
federal government against loss, and channeling their
depositors' money into lending activities.
 FINANCIAL
INSTITUTIONS
IDENTIFIED TYPES OF FINANCIAL INSTITUTIONS:

2) Nondepository financial institutions

◦
such as brokerage firms, life insurance companies, pension funds, and
investment companies, fund their investment activities directly from the
financial markets by selling securities to the public or by selling insurance
policies, in case of insurance companies.

Other types are CREDIT UNIONS, STOCK BROCKERAGE FIRMS, and

3)
ASSET MANAGEMENT FIRMS.