Scope and

Role of
Financial
Management
PART III
R E P O RT E R S :

ABBY GAIL LENON

A RV I N T U A Z O N

SHARMAIYNNE LOU DAMPIL

THE BANGKO SENTRAL NG PILIPINAS AND PHILIPPINE FINANCIAL SYSTEM

The Bangko Sentral ng Pilipinas (BSP) is the central

bank of the Republic of the Philippines. It was
established on July 3, 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
January 3, 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.
BSP LOGO ELEMENTS and COLORS
THREE STARS
Represent the three pillars of central banking: price
stability, stable banking system, and a safe and
reliable payment system. It may also be interpreted
as a geographical representation of BSP’s equal
concern for the impact of its policies and programs
on all Filipinos. Stars are rendered in GOLD to
symbolize wisdom, wealth, idealism, and high
quality.

PHILIPPINE EAGLE
Our National bird, is the world’s largest eagle and is
a symbol of strength, clear vision and freedom, the
qualities we aspire for as a central bank.
 Mandate, Functions & Responsibilities
 LIQUIDITY MANAGEMENT –
THE B S P F O R M U L AT E S A N D IMPLEMENTS M O N E T A R Y P O L I C Y A I M E D AT
I N F L U E N C I N G M O N E Y S U P P LY C O N S I S T E N T W I T H I T S P R I M A R Y O B J E C T I V E T O
M A I N T A I N P R I C E S T A B I L I T Y.
 
 CURRENCY ISSUE –
T H E B S P H A S T H E E X C L U S I V E P O W E R T O I S S U E T H E N AT I O N A L C U R R E N C Y. A L L
N O T E S A N D C O I N S I S S U E D B Y T H E B S P A R E F U L LY G U A R A N T E E D B Y T H E
G O V E R N M E N T A N D A R E C O N S I D E R E D L E G A L T E N D E R F O R A L L P R I VAT E A N D
PUBLIC DEBTS.
  
 LENDER OF LAST RESORT –
THE BSP EXTENDS DISCOUNTS, LOANS AND A D VA N C E S TO BANKING
INSTITUTIONS FOR LIQUIDITY PURPOSES.
 
 Mandate, Functions & Responsibilities
 FINANCIAL SUPERVISION -
T H E B S P S U P E RV I S E S B A N K S A N D E X E R C I S E S R E G U L AT O R Y P O W E R S OVER
NONBANK INSTITUTIONS PERFORMING QUASI- BANKING FUNCTIONS.
 
 MANAGEMENT OF FOREIGN CURRENCY RESERVES
T H E B S P S E E K S T O M A I N TA I N S U F F I C I E N T I N T E R N AT I O N A L R E S E RV E S T O M E E T
ANY FORESEEABLE NET DEMANDS FOR FOREIGN CURRENCIES IN ORDER TO
P R E S E RV E T H E I N T E R N AT I O N A L S TA B I L I T Y A N D C O N V E R T I B I L I T Y O F T H E
PHILIPPINE PESO.
 
 D E T E R M I N AT I O N O F E X C H A N G E R AT E P O L I C Y –

T H E B S P D E T E R M I N E S T H E E X C H A N G E R AT E P O L I C Y O F T H E P H I L I P P I N E S .
C U R R E N T LY, T H E B S P A D H E R E S T O A M A R K E T- O R I E N T E D F O R E I G N E X C H A N G E
R AT E P O L I C Y S U C H T H AT T H E R O L E O F B A N G K O S E N T R A L I S P R I N C I PA L LY T O
E N S U R E O R D E R LY C O N D I T I O N S I N T H E M A R K E T .
AGENCY PROBLEMS

Shareholders versus Managers

The agency problem arises when a manager
owns less than 100 percent of the business
enterprise's ownership. As a result of the
separation between the managers and
owners, managers may make decisions that
are not in line with the goal of maximizing
shareholder wealth.
 AGENCY PROBLEMS

Creditors versus Shareholders

Conflicts develop if managers, acting in the
interest of shareholders, take on projects with
greater risk than creditors anticipated and
raise the debt level higher than was expected.
These actions tend to reduce the value of the
debt outstanding
THE SECURITIES AND
EXCHANGE COMMISSION
The Securities and Exchange Commission
(SEC) mandates sweeping changes. SEC
approved the promulgation of this Revised
Code of Corporate Governance which shall
apply to registered corporations and to
branches or subsidiaries of foreign
corporations operating in the Philippines.
3 BASIC FORMS OF BUSINESS ORGANIZATION

1. SOLE 2. PARTNERSHIP 3. CORPORATION

PROPRIETORSHIP
SINGLE PROPRIETORSHIP

It is a business owned by one individual.

One Of the three forms of business
organizations, single proprietorships are
the greatest in number.
 PARTNERSHIP

The partnership is similar to the single

proprietorship except that the business
has more than one owner.
 CORPORATION
The corporation is a legal entity that exists
apart from its, owners, which are better
known as shareholders. Ownership is
evidenced by possession of share capital.
In terms of types of businesses, the
corporate form is not the greatest in
number, but it is the most important in
terms of total sales, assets, profits, and
contribution to national income.