bangko sentral ng pilipinas group 3

Bangko Sentral ng Pilipinas 2015

Bangko sentral ng pilipinasI. Introduction

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.

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.

II. DefinitionThe Bangko Sentral ng Pilipinas (BSP) is the Philippines’ central

monetary authority. It is considered as the central bank of the country based on the provisions of the 1987 Philippine Constitution and the New Central Bank Act of 1993.

The new BSP logo has a white eagle, with three gold stars on its lower left side, all enclosed in a blue circle. The text “Bangko Sentral ng Pilipinas” is underlined with gold written along the left side of the circle. The openness of its right side symbolizes freedom and readiness of BSP. The Philippine eagle means to grow quickly and to fly toward to its goal. The blue background implies stability of BSP.

Principal Elements of BSP logo: Philippine Eagle , the national bird of the Philippines, symbolizes the ideal

qualities of a central bank such as, strength, clear vision and freedom. The three stars represent the three pillars of central banking such as price

stability, stable banking, and a safe and reliable payment system. The three stars may also mean the equal concern of BSP for the Filipinos in Luzon, Visayas, and Mindanao.

Blue color in its background means stability. White color prints show purity, neutrality, and mental

clarity. Gold stars embodies wealth, wisdom, idealism, and

high quality services. The font Non-serif bold, which was used to print the

text “Bangko Sentral ng Pilipinas”, implies the banks’ solidity, strength, and stability. This type of font also portrays professionalism in the company.

The circle as the shape of the country's coins symbolizes the continuing and unending quest to become an excellent monetary authority committed to improve the quality of life of Filipinos.

III. Nature THE NEW CENTRAL BANK ACT

CHAPTER I: ESTABLISHMENT AND ORGANIZATION OF THE BANGKO SENTRAL NG PILIPINASARTICLE I. CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE BANGKO SENTRAL

1 GROUP 3: Apolinario – Avestro – Ayop


SECTION 1. Declaration of Policy. - The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money, banking and credit.SECTION 2. Creation of the Bangko Sentral. - There is hereby established an independent central monetary authority, which shall be a body corporate known as the Bangko Sentral ng Pilipinas, hereafter referred to as the Bangko Sentral.

CHAPTER II: THE BANGKO SENTRAL AND THE MEANS OF PAYMENTARTICLE I. THE UNIT OF MONETARY VALUE

SECTION 48. The Peso. — The unit of monetary value in the Philippines is the "peso," which is represented by the sign "P”. The peso is divided into one hundred (100) equal parts called "centavos," which are represented by the sign "c."

CHAPTER III: GUIDING PRINCIPLES OF MONETARY ADMINISTRATION BY THE BANGKO SENTRALARTICLE I. DOMESTIC MONETARY STABILIZATION

SECTION 61. Guiding Principle. — The Monetary Board shall endeavor to control any expansion or contraction in monetary aggregates which is prejudicial to the attainment or maintenance of price stability.

IV. History1900 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.

February 1929 The Bureau of Banking under the Department of Finance took

over the task of banking supervision. 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.

1946 A joint Philippine-American Finance Commission was created to

study the Philippine currency and banking system. The Commission recommended the reform of the monetary system, the formation of a central bank and the regulation of money and credit.The charter of the Central Bank of Guatemala was chosen as the model of the proposed central bank charter.

August 1947 A Central Bank Council was formed to review the Commission’s



report and prepare the necessary legislation for implementation. 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.

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

3 January 1949 The Central Bank of the Philippines (CBP) was inaugurated and

formally opened with Hon. Miguel Cuaderno, Sr. as the first governor.The broad policy objectives contained in RA No. 265 guided the CBP in the implementation of its duties and responsibilities, particularly in relation to the promotion of economic development in addition to the maintenance of internal and external monetary stability.

November 1972 RA No. 265 was amended by Presidential Decree No. 72 to make

the CBP more responsive to changing economic conditions.PD No. 72 emphasized the maintenance of domestic and international monetary stability as the primary objective of the CBP. Moreover, the CBP’s authority was expanded to include not only the supervision of the banking system but also the regulation of the entire financial system.

January 1981 Further amendments were made with the issuance of PD No.

1771 to improve and strengthen the financial system, among which was the increase in the capitalization of the CBP from P10 million to P10 billion.

1986Executive Order No. 16 amended the Monetary Board membership to promote greater harmony and coordination of government monetary and fiscal policies.

3 July 1993 The Bangko Sentral ng Pilipinas (BSP) was established to replace

the CBP as the country’s central monetary authority.

V. Objectives of BSP The Central Bank is expected to provide the country with a more flexible, more

stable and safer monetary and financial system that will help fortify a stalwart economy. Hence, the BSP should see to it that they meet the following objectives:



a. Primarily to maintain price stability conducive to a balanced and sustainable growth of the economy;

b. To promote and maintain monetary stability and the convertibility of the peso;c. To provide payment and other financial services to the government, the public,

financial institutions, and foreign financial institutions;d. To foster monetary and credit exchange conditions;e. To preserve the international value of the peso and the convertibility of the peso

into other freely convertible currencies.f. To manage the production and distribution of the nation’s currencyg. To implement monetary policies that provide stable growth and employmenth. To supervise and regulate financial institutions

In order to achieve the primary objective of price stability, the Monetary Board shall rely on its moral influence and the powers granted to it under The New Central Bank Act for the management of monetary aggregates. Furthermore, both monetary and fiscal policies should be effectively and efficiently implemented between the government and the private sectors. The key is for them to cooperate and be fully coordinated.

VI. Functions of bsp Bangko Sentral ng Pilipinas shall have supervision over the operation of banks

and exercise such regulatory powers and other pertinent laws over the operation of finance companies and non-bank financial institutions performing quasi-banking functions. Being the central monetary authority, BSP perform the following functions:

a. Currency issue. The BSP 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. No other person or entity, public or private, may put into circulation notes, coins or any other object or document which, in the opinion of the Monetary Board, might circulate as currency. BSP is the one in charge of printing bills and minting coins. This function of BSP ensures the uniformity in design and made with the same material.

b. Liquidity Management. The BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability.

c. Lender of last resort. The BSP extends discounts, loans and advances to banking institutions for liquidity purposes. The Bangko Sentral may extend loans and advances for a period of not more than seven (7) days without any collateral for the purpose of providing liquidity to the banking system in times of need.

d. Financial Supervision and Examination. The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions. The Bangko Sentral shall have supervision over, and conduct periodic or special examinations of, banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities.

e. 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. In judging the adequacy of the international reserves, the Monetary Board shall be guided by the prospective receipts and payments of foreign exchange by the Philippines. In order that the Bangko Sentral may at all times have foreign exchange resources sufficient to enable it to maintain the international stability and convertibility of the peso, the Monetary Board may require the banks to sell to the Bangko Sentral all or part of their surplus holdings of foreign exchange. Such transfers may be required for all foreign currencies or according to the decision of the Monetary Board.

f. Determination of exchange rate policy. The BSP 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. The Monetary Board shall similarly determine the rates for other types of foreign exchange transactions by the Bangko Sentral, including purchases and sales of foreign notes and coins.

g. Government’s banker and financial advisor. The Bangko Sentral shall represent the Government in all dealings, negotiations and transactions with the International Monetary Fund and shall carry such accounts as may result from Philippine membership in, or operations with, said Fund. The Bangko Sentral shall be the official depository of the Government, its political subdivisions and instrumentalities as well as of government owned or controlled corporations and, as a general policy, their cash balances should be deposited with the Bangko Sentral.

VIi. ROLES of bsp The BSP is profoundly involved in various projects and activities aimed towards

alleviating poverty, contributing to the global fight against money laundering, increasing transparency of monetary policy and improving the financial literacy of the public.

a. Microfinance and Financial InclusionThe BSP has declared microfinance as its flagship program for poverty

alleviation in Year 2000 and has since then played a key role in the development of sustainable microfinance in the country. In 2000, the BSP was mandated by the General Banking Law to recognize microfinance as a legitimate banking activity and to set the rules and regulations for its practice within the banking sector. Since 2000, the BSP has become the prime advocate for the development of microfinance. Microfinance is a general term to describe financial services to low-income individuals or to those who do not have access to typical banking services. Microfinance is also the idea that low-income individuals are capable of lifting themselves out of poverty if given access to financial services. To this end, the Bangko Sentral aims to:

I. Provide the enabling policy and regulatory environment; II. Increase the capacity of the BSP and banking sector on microfinance operations; III. Promote and advocate for the development of sound and sustainable microfinance operations.

b. Advocacy on Anti-Money Laundering (AML)



Money laundering refers to a financial transaction scheme that aims to conceal the identity, source, and destination of illicitly-obtained money.

In order to implement its continued commitment and support of the global fight against money laundering, the BSP worked for the passage of the Anti-Money Laundering Act and issued a number of measures to bring the Philippines' regulatory regime on money laundering closer to international standards.

Republic Act No. 9160 otherwise known as The Anti-Money Laundering Act of 2001 was signed into law on September 29, 2001 and took effect on October 17, 2001. The implementing Rules and Regulations took effect on April 2, 2002. On March 7, 2003, R.A. No. 9194 (An Act Amending R.A. No. 9160) was signed into law and took effect on March 23, 2003. The revised Implementing Rules and Regulations took effect on September 7, 2003.

c. Financial LiteracyThe BSP has taken a proactive stance in embarking on a consumer

education program that aims to improve the basic financial literacy of the public. In line with this program, the BSP approved in January 2004 the creation of the BSP Consumer Education Committee. The Committee initially addressed the basic financial literacy needs of consumers of financial products and services. This involved familiarizing the public on the various banking products and services that they usually encounter in ordinary financial transactions.The Financial Consumer Affairs Group. Governor Amando M. Tetangco Jr. issued Officer Order No. 892 on 15 October 2006 that created the Financial Consumer Affairs Group (FCAG) of the Supervision and Examination Sector (SES) to support the SES in ensuring the protection of depositors and investors and enabling the smooth and orderly functioning of the entire financial system.Consumer Assistance Mechanism. The BSP recognizes the rights of consumers of financial products and services. Handbook on Consumer Laws Covering BSP-Supervised Financial Institutions - contains BSP circulars, relevant sections of the Manuals of Regulations for Banks and Non-Bank Financial Institutions, and other relevant laws on consumer protection and welfare.

d. Promote Greater Transparency of Monetary Policy-MakingAs part of the monetary authorities’ effort to promote greater

transparency of monetary policy-making in the Philippines, help manage inflation expectations and reputational risks, and enhance public awareness on the role of the BSP in the Philippine economy, the BSP conducts a series of public information campaign on the role of the BSP in the Philippine economy and the recent economic developments in various cities within and outside Metro Manila.


http://www.bsp.gov.ph/downloads/Regulations/consumerlaws.pdf

http://www.bsp.gov.ph/downloads/Regulations/consumerlaws.pdf

http://www.bsp.gov.ph/about/advocacies_fin_cam.asp

http://www.bsp.gov.ph/about/advocacies_fin_fcag.asp


e. Improve the Remittance EnvironmentThe BSP undertakes various bank-related initiatives to improve the

remittance environment and to channel remittances to productive undertakings. Through these initiatives, the BSP intends to maximize the benefits of remittances aimed at:

(1) Ensuring the smooth inflow of remittances, and (2) Promoting their use for development by channeling them to the

financial sector so that these funds can be mobilized for lending and other productive activities.

VIII. ORGANIZATION of the bsp

The Monetary Board exercises the powers and functions of the BSP which includes seven (7) members appointed by the President of the Philippines. Under the New Central Bank Act, certain qualifications for the members of the Monetary Board and also prohibits members from holding certain positions with other governmental agencies and private institutions that may give rise to conflicts of interest. With the exception of the members of the Cabinet, the Governor and the other members of the Monetary Board serve terms of six (6) years and may only be removed for cause. The BSP Monetary Board Chairman is Amando M. Tetangco, Jr. with 6 members: Cesar V. Purisima, Alfredo C. Antonio, Juan D. De Zuñiga, Jr., Valentin A. Araneta, Felipe M. Medalla, and Armando L. Suratos.

Executive Management Services – the functional grouping of all units directly reporting to the Monetary Board or to the Governor.

Governance of the Bank. The Monetary Board’s chairman is the BSP Governor, with five (5) full-time members from the private sector and one member from the Cabinet.

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. Amando Maglalang Tetangco, Jr. the incumbent Governor of the Bangko Sentral ng Pilipinas. He is the first BSP governor to serve two terms. A deputy governor heads each of the BSP's operating sector as follows:1. 1. Th

e Moneta ry Stability


https://en.wikipedia.org/wiki/Bangko_Sentral_ng_Pilipinas

https://en.wikipedia.org/wiki/Bangko_Sentral_ng_Pilipinas


Sector, which takes charge of the formulation and implementation of the BSP's monetary policy,

2. The Supervision and Examination Sector, which enforces and monitors compliance to banking laws to promote a sound and healthy banking system; and

3. The Resource Management Sector, mainly responsible for the management of human, financial, and physical resources of the Bank

Security Plant Complex – responsible for the production of Philippine currency, security documents, and commemorative medals and medallions; prepares financial statements and records financial receipts/disbursements, and processes bills for payment; manages and performs the printing of banknotes and other security documents.

IX. RESPONSIBILITIES OF THE BSPBSP, established as an independent central monetary authority in the Philippines,

shall provide policy directions in the areas of money, banking, and credit.A government corporation with fiscal and administrative autonomy, the BSP is

responsible, among other things, for: Maintaining price stability conducive to a balanced and sustainable growth of

the economy; Formulating and implementing policy in the areas of money, banking and

credit; and Supervising and regulating banks and quasi-banks, including their

subsidiaries and affiliates engaged in allied activities. In the exercise of its authority, the Monetary Board shall:1. Issue rules and regulations it considers necessary for the effective discharge of

the responsibilities and exercise of the powers;2. Direct the management, operations, and administration of the Bangko Sentral,

reorganize its personnel, and issue such rules and regulations as it may deem necessary or convenient for this purpose;

3. Establish a human resource management system in accordance with applicable laws and regulations;

4. Adopt an annual budget for and authorize such expenditures by the Bangko Sentral in the interest of the effective administration and operations of the Bangko Sentral in accordance with applicable laws and regulations; and

5. Indemnify its members and other officials of the Bangko Sentral against all costs and expenses reasonably incurred in connection with any civil or criminal action, suit or proceedings to which he may be, or is, made a party by reason of the performance of his functions or duties.

Under the New Central Bank Act, the Governor shall be the chief executive officer of the Bangko Sentral. His powers and duties shall be to:1. Prepare the agenda for the meetings of the Monetary Board;2. Execute and administer the policies and measures approved by the Monetary

Board;



3. Direct and supervise the operations and internal administration of the Bangko Sentral. The Governor may delegate certain of his administrative responsibilities to other officers or may assign specific tasks or responsibilities;

4. Appoint and fix the remunerations and other emoluments of personnel below the rank of a department head in accordance with the position and compensation plans approved by the Monetary Board, as well as to impose disciplinary measures upon personnel of the Bangko Sentral;

5. Render opinions, decisions, or rulings, which shall be final and executory until reversed or modified by the Monetary Board, on matters regarding application or enforcement of laws pertaining to institutions supervised by the Bangko Sentral and laws pertaining to quasi-banks;

6. Exercise such other powers as may be vested in him by the Monetary Board.

X. OPERATIonsUnder the The New Central Bank Act (RA 7653), operations of the central

bank shall include but not limited to the following:

a. Research and Statistics. — The Bangko Sentral shall prepare data and conduct economic research for the guidance of the Monetary Board in the formulation and implementation of its policies. Such data shall include, among others, forecasts of the balance of payments of the Philippines, statistics on the monthly movement of the monetary aggregates and of prices and other statistical series and economic studies useful for the formulation and analysis of monetary, banking, credit and exchange policies.

b. Authority to Obtain Data and Information. — The Bangko Sentral shall have the authority to request from government offices and instrumentalities, or government-owned or controlled corporations, any data which it may require for the proper discharge of its functions and responsibilities.

c. Bank Deposits and Investments. — Any director, officer or stockholder who, together with his related interest, contracts a loan or any form of financial accommodation from: (1) his bank; or (2) from a bank (a) which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries or (b) in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank, in excess of five percent (5%) of the capital and surplus of the bank, or in the maximum amount permitted by law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines.

d. Distribution of Assets. — In case of liquidation of a bank or quasi-bank, after payment of the cost of proceedings, including reasonable expenses and fees of the receiver to be allowed by the court, the receiver shall pay the debts of such institution, under order of the court, in accordance with the rules on concurrence and preference of credit as provided in the Civil Code.



e. Disposition of Revenues and Earnings. — All revenues and earnings realized by the receiver in winding up the affairs and administering the assets of any bank or quasi-bank within the purview of this Act shall be used to pay the costs, fees and expenses, salaries of such personnel whose employment is rendered necessary in the discharge of the liquidation together with other additional expenses caused thereby. The balance of revenues and earnings, after the payment of all said expenses, shall form part of the assets available for payment to creditors.

f. Operating Departments of the Bangko Sentral. —determine and provide for such operating departments and other offices, including a public information office, of the Bangko Sentral as it deems convenient for the proper and efficient conduct of the operations and the accomplishment of the objectives of the Bangko Sentral.

XI. FINANCIAL PERFORMANCEThe BSP also published various reports on the condition and performance of the

Philippine financial system, whose recipients includes the President, both Houses of Congress and MB. The following are among the vital reports prepared during the year:

a. Status Report on the Philippine Financial System - submitted to the Office of the President and both Houses of Congress pursuant to Section 39c, Article V of the New Central Bank Act every six months.

b. Report on the Implementation of R.A. No. 9178 "Barangay Micro Business Enterprises (BMBEs) Act of 2002" - An annual report on the status of implementation of BMBE Act (R.A. No. 9178) which is submitted to both Houses of Congress and the Office of the President.

c. Report on Capital Adequacy Ratio (CAR) of Banks - A quarterly report on the capitalization of banks in line with BSP’s risk-based capital adequacy framework.

d. Report on the NPLs of Banks - A monthly report on the asset quality of universal and commercial banks (U/KBs), as an off-site supervisory tool, to help banks improve their positions and alert them to undertake remedial measures if their NPLs and nonperforming assets (NPA) ratios fall above the industry average.

The BSP Balance Sheet (as of end-December 2014)

As of end-December 2014, total assets reached P4, 087.5 billion, 2.7% or P114.6 billion lower than the year-ago level. The BSP’s liabilities decreased by P118.2 billion or 2.8% to P4, 043.2 billion. Meanwhile, the BSP’s net worth rose to P44.3 billion compared to th e year-ago level of P40.8 billion.



The BSP Net Income (January-December 2014)

Total revenues for 2014 amounted to P50.3 billion, lower than the P56.6 billion posted last year. This was mainly due to the combined decrease in miscellaneous earnings and net income from branches of about P7.2 billion from the previous year’s aggregate level. Meanwhile, interest income improved by 2.6 percent or P0.9 billion higher than the level posted in 2013. Total expenditures amounted to P70.5 billion, P14.4 billion lower than the level posted last year. The y-o-y decrease in expenditures was due mainly to lower interest expense, which fell by 22.3 percent, on account of the reduction of interest rates on placements in the SDA facility by 50 bps each in January, March and April 2013 and of lower SDA placements. Interest rate on the said facility, however, was raised twice by 25 basis points in 2014 (June and September).References:http://en.wikipilipinas.org/index.php/Bangko_Sentral_ng_Pilipinashttp://www.bsp.gov.ph/about/overview.asphttp://www.bsp.gov.ph/downloads/publications/2014/annrep2014.pdfhttps://tl.wikipedia.org/wiki/Bangko_Sentral_ng_Pilipinaswww.chanrobles.com/legal3bsp.htm#.VhPBZuyqqkqhttp://www.amlc.gov.ph/amla.htmlhttp://www.kiva.org/about/microfinancehttps://www.law.cornell.edu/wex/money_launderinghttp://www.bwtp.org/arcm/Philippines/II_Organisations/Supporting_Organisations/documents/BangkoSentralngPilipinas.pdf


http://www.bwtp.org/arcm/Philippines/II_Organisations/Supporting_Organisations/documents/BangkoSentralngPilipinas.pdf

http://www.bwtp.org/arcm/Philippines/II_Organisations/Supporting_Organisations/documents/BangkoSentralngPilipinas.pdf

https://www.law.cornell.edu/wex/money_laundering

http://www.kiva.org/about/microfinance

http://www.chanrobles.com/legal3bsp.htm#.VhPBZuyqqkq

http://anrobles.com/legal3bsp.htm#.VhPBZuyqqkq

http://www.bsp.gov.ph/downloads/publications/2014/annrep2014.pdf

http://www.bsp.gov.ph/about/overview.asp

http://en.wikipilipinas.org/index.php/Bangko_Sentral_ng_Pilipinas

bangko sentral ng pilipinas group 3

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