Central Monetary Authority Philippines CENTRAL MONETARY AUTHORITY DEFINITION

  • Slides: 24
Download presentation
Central Monetary Authority (Philippines)

Central Monetary Authority (Philippines)

CENTRAL MONETARY AUTHORITY DEFINITION ● The entity (typically the central bank) given the authority

CENTRAL MONETARY AUTHORITY DEFINITION ● The entity (typically the central bank) given the authority by the government or parliament to control money supply by raising or reducing interest rates, oversees exchange rate policy and usually also supervises the banking sector.

CBP as CMA Later, PD 1801 designated the Central Bank of the Philippines as

CBP as CMA Later, PD 1801 designated the Central Bank of the Philippines as the central monetary authority (CMA). Years later, the 1987 Constitution adopted the provisions on the CMA from the 1973 Constitution that were aimed essentially at establishing an independent monetary authority through increased capitalization and greater private sector representation in the Monetary Board.

CBP/BSP ● The Bangko Sentral ng Pilipinas (BSP) is the independent central monetary authority

CBP/BSP ● The Bangko Sentral ng Pilipinas (BSP) is the independent central monetary authority of the Republic of the Philippines. Established under the New Central Bank Act of 1993, the BSP is primarily mandated by law to ensure the maintenance of price stability conducive to a balanced and sustainable growth of the economy.

Presidential Decree No. 1801 ESTABLISHING THE CENTRAL BANK OF THE PHILIPPINES AS THE CENTRAL

Presidential Decree No. 1801 ESTABLISHING THE CENTRAL BANK OF THE PHILIPPINES AS THE CENTRAL MONETARY AUTHORITY

PRESIDENTIAL DECREE NO. 1801 WHEREAS, the Constitution provides that the National Assembly shall establish

PRESIDENTIAL DECREE NO. 1801 WHEREAS, the Constitution provides that the National Assembly shall establish a central monetary authority which shall provide policy direction in the areas of money, banking and credit; .

PRESIDENTIAL DECREE NO. 1801 WHEREAS, until the National Assembly shall otherwise provide, the Central

PRESIDENTIAL DECREE NO. 1801 WHEREAS, until the National Assembly shall otherwise provide, the Central Bank of the Philippines, operating under existing laws, shall function as the central monetary authority;

PRESIDENTIAL DECCREE NO. 1801 NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,

PRESIDENTIAL DECCREE NO. 1801 NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree:

PRESIDENTIAL DECREE NO. 1801 Section 1. The Central Bank of the Philippines is hereby

PRESIDENTIAL DECREE NO. 1801 Section 1. The Central Bank of the Philippines is hereby constituted as the central monetary authority pursuant to Section 14, Article XV of the Constitution. It shall provide policy direction in the areas of money, banking and credit and shall have supervisory authority over the operations of banks and exercise such regulatory authority as may be provided by law over the operations of non-bank financial intermediaries.

PRESIDENTIAL DECREE NO. 1801 Sec. 2. This Decree shall take effect immediately. Done in

PRESIDENTIAL DECREE NO. 1801 Sec. 2. This Decree shall take effect immediately. Done in the City of Manila this 16 th day of January, in the year of Our Lord, nineteen hundred and eighty-one.

Primary Objective and Responsibility ● The BSP is primarily mandated by law to ensure

Primary Objective and Responsibility ● The BSP is primarily mandated by law to ensure the maintenance of price stability conducive to a balanced and sustainable growth of the economy. Thus, price stability is considered a necessary complement, rather than an alternative, to economic growth.

Central Bank of Philippines Mission and Vision As a MONETARY AUTHORITY the BSP aims

Central Bank of Philippines Mission and Vision As a MONETARY AUTHORITY the BSP aims to achieve parity with international standards and act as a catalyst to make the Philippine economy a globally competitive one. The central bank also tries to make sure that the financial system of the country is such that Filipinos enjoy a high standard of life.

Central Bank of Philippines Mission and Vision The BSP's major commitment is towards ensuring

Central Bank of Philippines Mission and Vision The BSP's major commitment is towards ensuring and promoting the consistency of prices and providing a positive leadership that is necessary to make sure the financial system stays strong. The bank also aims to assist the economy in experiencing a sustainable and balanced level of growth it also implements the necessary monetary policies and supervises the financial organizations in ways that are required to achieve the goal.

Central Bank of Philippines Governance The Monetary Board is the leading authority at the

Central Bank of Philippines Governance The Monetary Board is the leading authority at the BSP and performs important functions such as management of the financial system and formulation and implementation of monetary policies.

Central Bank of Philippines Governance ● ● The Governor heads the Monetary Board and

Central Bank of Philippines Governance ● ● The Governor heads the Monetary Board and also acts as the BSP CEO. He or she is responsible for supervising and directing the internal administration and functions of the bank. The Monetary Sector implements and makes the banks monetary policies. It accepts servicing withdrawals, deposits, and provides credit through the rediscounting facility.

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central Monetary Authority • • • 1993 - came up with the rudiments of a bill for the establishment of a central bank for the country 1935 -1941 (commonwealth period)discussion about a Philippine central bank 1939 - as required by the Tydings-Mcduffie act, Philippine legislature passed a law establishing a central bank. However, US President F. D. Roosevelt disapproved it due to strong opposition from vested interests.

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central Monetary Authority • • • 1944( during Japanese occupation)- A second law was passed, but the arrival of the American liberalization forces aborted its implementation. 1946 - Pres. M. Roxas instructed the Finace Secretary to draw up a charter for a central bank. 1947 -The commission w/c studied Philippine Financial, monetary and fiscal problems recommended as a shift from the dollar exchange standard to a managed currency system.

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central Monetary Authority • • • February 1948 - The Central Bank Council prepare the charter of a proposed monetary authority, produced a draft, it was submitted to Congress. June 1948 - Pres. E. Quirino affixed his signature on Republic Act No. 265, The central Bank Act of 1948. November 29, 1972 - Presidentia; Decree No. 72 adopted the recommendations of the Joint IMF-CB Banking Survey Commission

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central Monetary Authority • • • 1973 Constitution- The National Assembly was mandated to establish an independent central monetary authority. Later 1801 designated the Central Bank of the Philippines as the central monetary authority (CMA)/ 1987 Constitution adopted the provisions on CMA from 1973 Constitution. June 14, 1993 - In accordance with a provision in the 1987 Constitution, Pres. F. V. Ramos signed into law Republic Act No. 7653, the New Central Bank Act.

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central

PRESIDENTIAL DECREE NO. 1801 Establishing the Central Bank of the Philippines as the Central Monetary Authority *The law provides for establishment of an independent monetary authority to be known as the Bangko Sentral ng Pilipinas, with the maintenance of price stability explicitly stated as its primary objective. The objective was only implied in the old Central Bank charter. The law gives the Bangko Sentral fiscal and administrative autonomy which the old Central Bank did not have. • JULY 3, 1993 – THE New Central Bank Act took effect

Under the New Central Bank Act, the BSP performs the following functions 1. 2.

Under the New Central Bank Act, the BSP performs the following functions 1. 2. 3. Liquidity Management- by formulating and implementing monetary policy aimed at influencing money supply, consistent with its primary objective to maintain price stability. Currency Issue- exclusive power to issue the national currency. Lender for last resort- extending discounts, loans and advances to banking institutions for liquidity purposes

Under the New Central Bank Act, the BSP performs the following functions 4. 5.

Under the New Central Bank Act, the BSP performs the following functions 4. 5. Financial Supervision- supervising banks and exercising regulatory powers over nonban institutions performing quasi-banking functions. Management of Foreign currency reservesby maintaining sufficient international reserves to meet any foreseeable net demands foreign currencies in order to preserve the international stability and convertibility of the Philippine peso.

Under the New Central Bank Act, the BSP performs the following functions 6. 7.

Under the New Central Bank Act, the BSP performs the following functions 6. 7. Determination of exchange rate policy- by determining the exchange rate policy of the Philippines Being the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and GOCCs.

End of slides….

End of slides….