An Overview of Banking in the Philippines

1. BANKING IN THE
PHILIPPINES
AVEC M. JOHN DARREL RILLO
ECONOMICS

2. 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.

3. 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.

4. 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.

5. IN FEBRUARY OF 1929
The Bureau of Banking under the
Department of Finance took over the task
of banking supervision.

6. IN 1939
A bill establishing a central bank was drafted by Secretary of
Finance Manuel Roxas and approved by the Philippine Legislature.
However, the bill was returned by the US government, without
action, to the Commonwealth Government.

7. 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.

8. 15 June 1948
The bill was signed into law as Republic Act No. 265 (The
Central Bank Act) by President Elpidio Quirino.

9. 3 January 1949
The Central Bank of the Philippines (CBP) was inaugurated and
formally opened with Hon. Miguel Cuaderno, Sr. as the first
governor.

10. 3 July 1993
The Bangko Sentral ng Pilipinas (BSP) was established
to replace the CBP as the country’s central monetary
authority.

11. 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.

12. BANGKO SENTRAL NG PILIPINAS
VISION
The BSP aims to be a world-class
monetary authority and a catalyst
for a globally competitive economy
and financial system that delivers a
high quality of life for all Filipinos.
MISSION
BSP is committed to promote and
maintain price stability and provide
proactive leadership in bringing
about a strong financial system
conducive to 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.

13. Functions and Operations
OBJECTIVES
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

14. 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:

15. Functions and Operations
Liquidity 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.

16. 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

17. 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.

18. Functions and Operations
Determination of 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.

19. 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.

20. 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)

21. GOVERNANCE OF THE BANK
THE GOVERNOR
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

22. GOVERNANCE OF THE BANK

23. 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

24. 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.

25. BSP’S IN THE PHILIPPINES
The BSP has three regional offices
performing cash operations, cash
administration, loans and
rediscounting, bank supervision and
gold buying operations. These
regional offices are located in La
Union, Cebu City and Davao City and
19 branches all over the Philippines.

26. 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.

27. 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.

28. 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.
3)Other types are CREDIT UNIONS, STOCK BROCKERAGE FIRMS,
and ASSET MANAGEMENT FIRMS.
◦ (Source: Fitch, Thomas P. Dictionary of banking terms. HG 151 F57
2000)

29. CAPABILITIES AND OBJECTIVES OF FINANCIAL
INSTITUTIONS
COMMON OBJECTIVES:
Maintain the balance between the returns and risks.
act as an intermediary between the capital market
and debt market.
responsible to transfer funds from investors to the
companies. (assist or manage the flow of money in
the economy.)

30. MERCI BEACOUP MES
AMIS…
ENCHANTE DEVOUS
SAVOIR CONNEAU.