FINANCIAL

SYSTEM
 DEFINITION:

Financial system is a system that allows the

exchange of funds between
financial market participants such as lenders,
investors, and borrowers.
 DEFINITION:
Financial systems operate at national and global levels.

A financial system may be defined as a set of

institutions, instruments and markets which promotes
savings and channels them to their most efficient use. It
consists of individuals (savers), intermediaries, markets
and users of savings (investors).
 DEFINITION:

Financial system can be known where ever the

exist the exchange of financial medium(money)
while there is an reallocation of funds into the
needy areas (financial markets, business firms,
banks) to utilize the potential of ideal money and
place them in use to get benefits out of them.
 DEFINITION:

Financial systems allow funds to be allocated,

invested, or moved between economic sectors.
They enable individuals and companies to share
the associated risks.
 THE
BANGKO SENTRAL
NG PILIPINAS
OBJECTIVE:

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.
VISION

The BSP aims to be recognized globally as the

monetary authority and primary financial system
supervisor that supports a strong economy and
promotes a high quality of life for all Filipinos.
MISSION

To promote and maintain price stability, a

strong financial system, and a safe and
efficient payments and settlements system
conducive to a sustainable and inclusive
growth of the economy.
3 PILLARS

https://bit.ly/3mzQeUX
 BANGKO SENTRAL
NG PILIPINAS

NON-BANKING
BANKING
FINANCIAL
INSTITUTIONS
INSTITUTION
 BANKING
INSTITUTION
 BANKING
INSTITUTIONS

GOVERNMENT
PRIVATE BANKING
BANKING
INSTITUTIONS
INSTITUTIONS

COMMERCIAL DEVELOPMENT
UNIVERSAL BANKS BANKS BANK OF THE
PHILIPPINES

THRIFT BANKS RURAL BANKS LAND BANK OF THE

PHILIPPINES

COOPERATIVE
ISLAMIC BANKS AL-AMANAH ISLAMIC
BANKS
INVESTMENT BANK OF
THE PHILIPPINES
 UNIVERSAL BANKS
Universal banking is a system in which banks provide a wide variety of
comprehensive financial services, including those tailored to retail,
commercial, and investment services.
Universal banks have the same powers and functions as with commercial
banks. In addition, universal banks may perform the following:
a. Powers of an investment house
b. Power to invest in non-allied enterprises
c. Power to own up to 100% of the equity in a thrift bank, rural bank, a
financial allied enterprise or a non-financial allied enterprise.
d. In case of listed universal banks, the power to own up to 100% of
voting stock of ONLY one universal bank or commercial bank.
 UNIVERSAL BANKS IN THE PHILIPPINES
Rizal Commercial Banking Corp. China Banking Corp
Security Bank Corp. Eastwest Banking Corp
Union Bank of the Philippines Metropolitan Bank and Trust Company
Asia United Bank Corp Philippine National Bank
Bank of the Philippine Islands Philippine Trust Company
BDO Unibank, Inc. United Coconut Planters Bank
Foreign Universal Banks in the Philippines
1. ANZ Banking Group Ltd. (from Australia)
2. Deutsche Bank AG (from Germany)
3. Hongkong & Shanghai Banking Corp. (HSBC) (from Hong
Kong)
4. ING Bank NV (from the Netherlands)
5. Mizuho Bank, Ltd. – Manila Branch (from Japan)
6. Standard Chartered Bank (Standard) (from UK)
 COMMERCIAL BANKS
Have the powers to exercise all such powers to carry out commercial
banking such as:
a. accepting drafts and issuing letters of credit,
b. discounting and negotiating promissory notes, drafts, bills of
exchange and other evidences of debt,
c. accepting or creating demand deposits,
d. receiving other types of deposit substitutes,
e. buying and selling foreign exchange and gold or silver bullion,
f. acquiring marketable bonds and other debt securities,
g. extending credit
 COMMERCIAL BANKS
Commercial banks may also:
a. invest in allied enterprises;
b. purchase, hold or convey real estate;
c. receive custody funds, documents and valuable objects;
d. act as financial agent and buy and sell by order of and for the
account of their customers, evidences of indebtedness and all types
of securities;
e. make collections and payments for the account of others; upon
prior approval of the Monetary Board act as managing agent,
adviser, consultant or administrator of investment accounts;
f. rent out safety deposit box; and,
g. engage in quasi-banking functions.
COMMERCIAL BANKS IN THE PHILIPPINES
Bank of Commerce

BDO Private Banks, Inc.

Philippine Bank of Communication

Philippine Veterans Bank

Robinsons Bank Corporation

 THRIFT BANKS
Composed of:
(a) savings and mortgage banks
(b) stock savings and loan associations and
(c) private development banks
 THRIFT BANKS
Thrift banks may perform the following:
a. grant secured or unsecured loans;
b. invest in readily marketable bonds and other debt securities,
commercial papers and accounts receivable, drafts, bills of
exchange,
c. acceptances or commercial notes;
d. issue domestic letters of credit;
e. extend credit facilities to private and government employees;
f. extend credit against the security of jewelry and similar items;
 THRIFT BANKS
g. accept savings and time deposits;
rediscount paper with Land Bank of the Phils, Devt Bank of the
Phils, and other GOCCs;
h. accept foreign currency deposits;
i. act as correspondent for other financial institutions;
j. purchase, hold or convey real estate;
k. offer other banking services provided in Sec 53 of RA no. 8791.
 THRIFT BANKS
With prior approval of the Monetary Board, thrift banks may also:
a. open current/checking accounts;
b. engage in trust, quasi-banking functions and money market operations;
c. act as collection agent for government entities;
d. act as official depository or national agencies and local government
funds in the local government unit the bank is located;
e. issue mortgage and chattel mortgage certificates;
f. invest in equity of allied undertakings;
g. issue foreign letters of credit;
h. pay/accept/negotiate import/export draft bills of exchange
THRIFT BANKS IN THE PHILIPPINES
BPI Family HSBC Savings
PSBank Malayan Bank Savings
Philippine Business Bank Equicom Savings
China Bank Savings 1st Valley Bank
City Savings CARD SME Bank
PNB Savings Luzon Development Bank*
Sterling Bank AllBank
Bank of Makati Overseas Filipino Bank
Producers Savings Bank Citystate Savings
UCPB Savings Yuanta Savings Bank
First Consolidated Bangko Kabayan
BPI Direct Banko Legazpi Savings Bank
Wealth Development
 RURAL BANKS
Rural banks may perform the following:
a. extend loans and advances to farmers, fishermen, farm
families, cooperatives, merchants, private and public
employees;
b. accept savings and time deposits;
c. act as correspondent for other financial institutions;
d. rediscount paper with Land Bank of the Phils, Devt Bank
of the Phils or any other bank;
e. act as collection agent;
f. offer other banking services provided in Sec 53 of RA
8791. With prior approval of the Monetary Board, an RB
may perform:
 RURAL BANKS
g. accept current or checking account provided rural
bank has a net asset of at least PHP5 million;
h. accept negotiable order of withdrawal accounts;
l. act as trustee over estates/properties of farmers
and merchants;
j. act as official depository of local government unit
in the local government unit where bank is locates;
k. sell domestic drafts;
l. invest in allied undertakings.
RURAL BANKS IN THE PHILIPPINES
BDO Network Bank Cebuana Lhuiller RB
East West Rural Bank Agribusiness Rural Bank
Card Bank Country Builders Rural Bank
Guagua Rural Bank Katipuna Bank
Card MRI Rizal Bank Cantilan Bank
FicoBank Marayo Bank
GM Bank of Luzon Summit Bank
BOF Inc. Rural Bank PBCom Rural Bank
RB of Angeles Bangko Mabuhay
Quezon Capital RB RB of Porac
Rang-ay RB ILocos Consilidated
Cebuana Lhuiller RB
 COOPERATIVE BANKS

A Coop Bank shall primarily provide financial, banking and credit

services cooperatives and their members, and to general public. It may
also perform any or all of the banking services offered by other types of
banks subject to prior approval of the BSP.
 COOPERATIVE BANKS
Cooperative banks are owned by their customers and follow the
cooperative principle of one person, one vote. Co-operative banks are
often regulated under both banking and cooperative legislation. They
provide services such as savings and loans to non-members as well as
to members, and some participate in the wholesale markets for bonds,
money and even equities. Many cooperative banks are traded on public
stock markets, with the result that they are partly owned by non-
members. Member control is diluted by these outside stakes, so they
may be regarded as semi-cooperative.
 COOPERATIVE BANKS
RULES ON COOPERATIVE BANKS:
a. Cooperative banks are organized by cooperatives registered with
the Cooperative Development Authority and are licensed as
cooperative banks by the BSP.
b. No cooperative member shall own more than 40% of the total capital
contributions of a cooperative bank.
c. Only one cooperative bank is allowed in each province, except in
cases where economic conditions of the province make a second
one viable.
d. The primary clients for financial, banking and credit services are
cooperatives and their members, although non-members may be
served.
 COOPERATIVE BANKS IN THE
PHILIPPINES
Banco cooperative De Zamboanga Mindanao Consolidated Cooperative Bank
Cooperative Bank of Mt. Province
Bataan Cooperative Bank
Cooperative Bank of Aurora Cooperative Bank of Negros Oriental
Cooperative Bank of Benguet Cooperative Bank of Nueva Vizcaya
Cooperative Bank of Bohol Cooperative Bank of Palawan
Cooperative Bank of Cagayan Cooperative Bank of Quezon Province
Cooperative Bank of Cebu Cooperative Bank of Zambales
Cooperative Bank of Cotabato Network Consolidated Bank Cooperative
Consolidated Cooperative Bank First Isabela Cooperative Bank Inc
Cooperative Bank of La Union Ilocos Consolidated Cooperative Bank
 ISLAMIC BANKS
Islamic banking or Islamic finance or sharia-compliant finance is
banking or financing activity that complies with sharia (Islamic law)
and its practical application through the development of
Islamic economics. Some of the modes of Islamic banking/finance
include Mudarabah (profit- sharing and loss-bearing), Wadiah
(safekeeping), Musharaka (joint venture), Murabahah (cost-plus),
and Ijara (leasing).
Two fundamental principles of Islamic banking are the sharing of
profit and loss, and the prohibition of the collection and payment of
interest by lenders and investors.
 ISLAMIC BANKS
An islamic bank, insofar as not inconsistent or incompatible with RA
6848, may perform:
a. open savings accounts for safekeeping with no participation in
profit or loss unless authorized by the holder;
b. accept investment account placements and invest the same for a
term with the bank's funds in Islamically permissible transactions
on participation basis;
c. accept foreign currency deposits;
d. buy and sell foreign exchange; handle remittances and fund
transfers;
 ISLAMIC BANKS
e. accept drafts and issue letters of credit, negotiate notes
and bills of exchange and other evidence of indebtedness;
f. act as collection agent;
g. provide financing;
h. handle storage operations for goods or commodity financing;
i. issue shares for the account of institutions and companies
assisted by the bank;
j. undertake various investments in all transactions
allowed by Islamic Shari'a;
k. other services allowed by Monetary Board.
 BANKING
INSTITUTIONS

GOVERNMENT
PRIVATE BANKING
BANKING
INSTITUTIONS
INSTITUTIONS

COMMERCIAL DEVELOPMENT
UNIVERSAL BANKS BANKS BANK OF THE
PHILIPPINES

THRIFT BANKS RURAL BANKS LAND BANK OF THE

PHILIPPINES

COOPERATIVE
ISLAMIC BANKS AL-AMANAH ISLAMIC
BANKS
INVESTMENT BANK OF
THE PHILIPPINES
Trivias:

In 2007, a typographical error gave money collectors a new

addition to their collection.

During the printing of 100-peso bills, the central bank didn’t

notice a spelling mistake on former President Gloria Macapagal-
Arroyo’s name: instead of Arroyo, the money had Arrovo.
Unfortunately, about 1,000 pieces had already been printed and
released before they noticed the error. These rare notes are
currently in the hands of collectors. –Dino Mari Testa
Trivias:

Piggy banks are legal yet highly discouraged.

But melting coins for repurposing is an illegal activity and is

considered smuggling. Under the Presidential Decree 247, it is
“unlawful for any person to willfully deface, mutilate, tear, burn or
destroy, in any manner whatsoever, currency notes and coins
issued by the Central Bank of the Philippines.” In 2009, one
businessman already got a sampling of this after he got caught
smuggling coins to be melted for bath fixtures.