Your SlideShare is downloading. ×
Economics presentations
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Economics presentations

322
views

Published on

Published in: Economy & Finance, Business

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
322
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
16
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. MONETARY POLICY The concept of Monetary Policy Monetary Policy consists of the actions and decisions made by the government to create appropriate monetary conditions.
  • 2. •It is usually based on the country’s fiscal policy. •In the Philippines, the monetary policy is implemented by the Monetary Board through the Central Bank of the Philippines
  • 3. Objectives of Monetary Policy • More stable price level • Opportunity for full employment • Low and stable rate of inflation
  • 4. • Orderly foreign exchange market • Stable foreign exchange market • Adequate level of foreign exchange reserves.
  • 5. Tools of Monetary Policy The central bank or the monetary authorities of a country have three(3) instruments or tools by which they can influence the money supply.
  • 6. First Tool: Open Market Operation In this tool, the central bank may buy or sell government bonds or securities or instruments in the open market.
  • 7. Second Tool: Changing the Reserve Ratio Banks are required by the government to have reserves, which means that they should set aside a certain percentage of the amount of deposits they have.
  • 8. This percentage is called reserve ratio. Third Tool: The Discount Rate Commercial banks also borrow money, but not only from the central bank.
  • 9. Situation A: Recession Buy Securities RECESSION Reduce Reserve Ratio Lower Discount Rate
  • 10. During a recession, the central bank may buy securities to increase the reserves, reduce the reserve ratio to further increase their reserves,
  • 11. and lower the discount rate to encourage commercial banks to borrow from the central bank to add to their reserves.
  • 12. Situation B: Inflation Sell Securities INFLATION Increase Reserve Ratio Raise Discount Rate
  • 13. During inflation, the central bank may sell securities to reduce the reserves of commercial banks, increase the reserve ratio to further decrease theirs reserves,
  • 14. and raise the discount rate so that commercial banks will not be encouraged to borrow from the central bank.
  • 15. Philippines Monetary Policy As mandated by R.A. 7653, the main objective of this is to promote a low and stable inflation and price stability to a balanced and sustainable growth of the economy.
  • 16. The Inflation Target The inflation target set by the BSP is based on the average year-on-year change in the consumer price index (CPI) over the calendar year.
  • 17. The Monetary And Financial Sectors The Bangko Sentral ng Pilipinas is only the central financial authority in the country.
  • 18. However, it is not the only financial institution that offers monetary and financial services. There are also institutions called banks, which are also a main component of the country’s monetary sector.
  • 19. The Philippines Banking System  Universal and Commercial banks -These have the largest resources and offer the widest services.
  • 20.  Thrift Banks - consist of savings and mortgage banks, private development banks, stock savings and loan associations and microfinance thrift banks.
  • 21.  Rural and Cooperative Banks - these are very popular in the provinces and in rural areas.
  • 22.  Microfinance Banks -are the latest in the banking system and focus on providing loans and financial services for the microenterprises of low-income individuals and families
  • 23. Aside from those, there are also other financial institutions that provide financing. First is Cooperatives, which are organized by the people themselves who become partowners or shareholders.
  • 24. Pawnshops also provide small loans to people on the basis of a physical collateral or guarantee, such as jewelry or household appliances.
  • 25. Learning About Money ‘’money makes the world go round’’
  • 26. What is money? In economics, money may be defined as follows:  Money is any common medium of exchange acceptable in payment for goods/services/for the settlement of debts.
  • 27.  Money is what we use to buy things with. Money is anything generally acceptable as a medium of exchange.
  • 28. Although money may not be used in all economic activities, it is money which makes economic transactions easier.
  • 29. Functions of Money  Medium of Exchange -this is the foremost function of money. -it serves as a convenient tool for the exchange of goods.
  • 30.  Measure of Value -people use money as a standard in measuring the value or worth of goods and services.
  • 31.  Store of Value -money is a good way to store wealth because it is very liquid, meaning the moment you have it you can immediately spend it.
  • 32. Features of Money  General Acceptability - individuals and businesses accept money as part of long business practice, and generally trust its value, anywhere.
  • 33.  Legal Tender - money is declared as a legal tender by government, which means that its acceptability and legality are derived from the law.
  • 34.  Divisibility - money, even when divided into denominators, has the quality of divisibility.
  • 35. Recognizable - part of the acceptability of money is its being recognizable by all sectors of the economy.
  • 36. Money in the Philippines The basic unit of monetary value in the Philippines is the peso, represented by the letter P traversed by an equal sign.
  • 37. The Bangko Sentral ng Pilipinas As part of the country’s monetary policy, the money supply is controlled and managed by the central bank.
  • 38. Highlights of Central Banking History • 1990 – The First Philippine Commission placed all banks under the Bureau of Treasury. • 1929 – The Bureau of Banking under the Department of Finance
  • 39. • 1939 – Under the Commonwealth government • 1946 – a joint PhilippineAmerican Finance Commission • 1947 – Central Bank council was formed.
  • 40. • 1948 – a bill establishing the Central Bank of the Philippines was submitted to Congress by Pres. Roxas. • 1949 – The Central Bank of the Philippines was formally inaugurated.
  • 41. • 1972 – Presidential Decree No. 72 was issued. • 1981 – Presidential Decree No. 1771 was issued • 1986 – composition of the Monetary Board was amended.
  • 42. • 1993 – The Bangko Sentral ng Pilipinas was formally established.
  • 43. Vision and Mission of the BSP VISION The BSP, imbued with the values of integrity, excellence and patriotism, aims to be a world-class monetary authority
  • 44. And a catalyst for a globally competitive economy and financial system that delivers a high quality of life for all Filipinos.
  • 45. MISSION BSP is committed to promote and maintain price stability and provide proactive leadership in bringing about a strong financial system conductive to a balanced and sustainable growth of the economy.
  • 46. Towards this end, it shall conduct sound monetary policy and effective supervision over financial institutions under its jurisdiction.
  • 47. Overview of BSP Functions and Operations • Liquidity Management • Currency Issue • Lender of Last Resort • Financial Supervision •Management of Foreign Currency Reserves
  • 48. • Determination of Exchange Rate Policy • Other Activities
  • 49. The Monetary Board Chairman: Amando M. Tetangco, Jr. Members: Cesar V. Purisima Alfredo C. Antonio Ignacio R. Bunye Peter B. Favila Felipe M. Medalla Armando L. Suratos
  • 50. Major Functions: 1. Issue rules and regulations. 2. Direct management, operations, and administration of BSP… 3. Establish a human resources management system…
  • 51. 4. Adopt an annual budget and authorize such expenditures by BSP… 5. Indemnify its members and other officials of BSP…
  • 52. The Governor The governor is the chief executive officer of BSP and is required to direct and supervise the operations and internal administration of BSP.
  • 53. Governor's duties and responsibilities: 1. Prepares the agenda… 2. Executes and administers policies and measures… 3. Appoints and fixes the remunerations and other emoluments…
  • 54. 4. Renders opinion, decisions, or rulings… 5. Exercises such other powers… 6. Represents the Monetary Board and BSP… 7. Signs contracts…
  • 55. Advocacies of the BSP The BSP has advocated projects on poverty alleviation, anti-money laundering, and public financial literacy.
  • 56. International Financial Bodies And Foreign Aid Efforts to better economies of nations are also made by international financial bodies, which put a great deal into helping, particularly on the development side through foreign aid.
  • 57. Some of these international financial bodies are the following: • World Bank- an international institution that provides financial aid and technical assistance to developing countries all over the world.
  • 58. • International Monetary Fund -this is actually a specialized agency of the UN, the objective of which is to promote international monetary cooperation and the growth of world trade, and coordinate multilateral payment among member states.
  • 59. • Foreign Loan Providers - these are countries which provide development loans or credits to less developed countries or LCDs.
  • 60. Among the criticisms of foreign aid are the following: 1. 2. 3. 4. Too much dependency Too much intrusion Too much bureaucracy Too much corruption