LOGOS OF CENTRAL BANK OF THE PHILIPPINES AND BANGKO SENTRAL NG PILIPINAS

The Central Bank Seal

The Original Seal of the Central Bank of the Philippines was designed by Dan Zamora of Crispulo Zamora & Sons based on the ideas suggested to him by Governor Miguel Cuaderno, Sr. From an interview with Zamora in 1975, Rufo Buenviaje of the Department of Economic Research called the following symbolic interpretation of the seal’s features:

Foreground: A man symbolizing the Filipino Nation pushing the Wheel of Progress.

Background: Rays of the rising sun denoting the Dawn of Prosperity and revealing the country’s traditional agricultural products as the basic ingredients for industrial production and commerce.

The arms proper is a circle, symbolizing perpetuity, and around it, the text CENTRAL BANK OF THE PHILIPPINES to suggest that the Bank provides the necessary fiscal, commercial and monetary policies.

the original seal

During the time of Governor Gregorio S. Licaros, the original realistic rendering of the Central Bank seal gave way to graphical presentation based on the same design.

The Bangko Sentral Seal

The BSP seal is a composite of the Filipino flag, the risen sun and mountains framed by a wheel and ringed by the inscription, “BANGKO SENTRAL NG PILIPINAS."

The FLAG symbolizes the country and expresses the Filipino people's nationalism and unity.

The RISEN SUN signifies the bright future and renewed spirit of the nation.

The MOUNTAINS represent stability and the WHEEL signifies movement and industry, the key to the nation's economic progress.

The new BSP logo is a perfect round shape in blue that features three gold stars and a stylized Philippine eagle rendered in white strokes. These main elements are framed on the left side with the text inscription “Bangko Sentral ng Pilipinas” underscored by a gold line drawn in half circle. The right side remains open, signifying freedom, openness, and readiness of the BSP, as represented by the Philippine eagle, to soar and fly toward its goal. Putting all these elements together is a solid blue background to signify stability.

Principal Elements:

1. The Philippine Eagle, our national bird, is the world’s largest eagle and is a symbol of strength, clear vision and freedom, the qualities we aspire for as a central bank.

2. The three stars represent the three pillars of central banking: price stability, stable banking system, and a safe and reliable payments system. It may also be interpreted as a geographical representation of BSP’s equal concern for the impact of its policies and programs on all Filipinos, whether they are in Luzon, Visayas or Mindanao.

MONETARY TOOLS

1. Monetary base

-       Monetary policy can be implemented by changing the size of the monetary base. This directly changes the total amount of money circulating in the economy. A central bank can use open market operations to change the monetary base. The central bank would buy/sell bonds in exchange for hard currency. When the central bank disburses/collects this hard currency payment, it alters the amount of currency in the economy, thus altering the monetary base.The monetary authority exerts regulatory control over banks. Monetary policy can be implemented by changing the proportion of total assets that banks must hold in reserve with the central bank. Banks only maintain a small portion of their assets as cash available for immediate withdrawal; the rest is invested in illiquid assets like mortgages and loans. By changing the proportion of total assets to be held as liquid cash, the Federal Reserve changes the availability of loanable funds. This acts as a change in the money supply. Central banks typically do not change the reserve requirements often because it creates very volatile changes in the money supply due to the lending multiplier.

2.  Discount window lending

-       Discount window lending is where the commercial banks, and other depository institutions, are able to borrow reserves from the Central Bank at a discount rate. This rate is usually set below short term market rates (T-bills). This enables the institutions to vary credit conditions (i.e., the amount of money they have to loan out), there by affecting the money supply. It is of note that the Discount Window is the only instrument which the Central Banks do not have total control over.

-       By affecting the money supply, it is theorized, that monetary policy can establish ranges for inflation, unemployment, interest rates ,and economic growth. A stable financial environment is created in which savings and investment can occur, allowing for the growth of the economy as a whole.

3.  Interest rates

-       The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates. Monetary authorities in different nations have differing levels of control of economy-wide interest rates. In the United States, the Federal Reserve can set the discount rate, as well as achieve the desired Federal funds rate by open market operations. This rate has significant effect on other market interest rates, but there is no perfect relationship. In the United States open market operations are a relatively small part of the total volume in the bond market. One cannot set independent targets for both the monetary base and the interest rate because they are both modified by a single tool — open market operations; one must choose which one to control.

-       In other nations, the monetary authority may be able to mandate specific interest rates on loans, savings accounts or other financial assets. By raising the interest rate(s) under its control, a monetary authority can contract the money supply, because higher interest rates encourage savings and discourage borrowing. Both of these effects reduce the size of the money supply.

4.  Currency board

-       A currency board is a monetary arrangement that pegs the monetary base of one country to another, the anchor nation. As such, it essentially operates as a hard fixed exchange rate, whereby local currency in circulation is backed by foreign currency from the anchor nation at a fixed rate. Thus, to grow the local monetary base an equivalent amount of foreign currency must be held in reserves with the currency board. This limits the possibility for the local monetary authority to inflate or pursue other objectives. The principal rationales behind a currency board are three-fold:

1.  To import monetary credibility of the anchor nation;

2.  To maintain a fixed exchange rate with the anchor nation;

3.  To establish credibility with the exchange rate (the currency board arrangement is the hardest form of fixed exchange rates outside of dollarization).

-       In theory, it is possible that a country may peg the local currency to more than one foreign currency; although, in practice this has never happened (and it would be a more complicated to run than a simple single-currency currency board). A gold standard is a special case of a currency board where the value of the national currency is linked to the value of gold instead of a foreign currency.

-       The currency board in question will no longer issue fiat money but instead will only issue a set number of units of local currency for each unit of foreign currency it has in its vault. The surplus on the balance of payments of that country is reflected by higher deposits local banks hold at the central bank as well as (initially) higher deposits of the (net) exporting firms at their local banks. The growth of the domestic money supply can now be coupled to the additional deposits of the banks at the central bank that equals additional hard foreign exchange reserves in the hands of the central bank. The virtue of this system is that questions of currency stability no longer apply. The drawbacks are that the country no longer has the ability to set monetary policy according to other domestic considerations, and that the fixed exchange rate will, to a large extent, also fix a country's terms of trade, irrespective of economic differences between it and its trading partners.

-       Hong Kong operates a currency board, as does Bulgaria. Estonia established a currency board pegged to the Deutschmark in 1992 after gaining independence, and this policy is seen as a mainstay of that country's subsequent economic success (see Economy of Estonia for a detailed description of the Estonian currency

board). Argentina abandoned its currency board in January 2002 after a severe recession. This emphasized the fact that currency boards are not irrevocable, and hence may be abandoned in the face of speculation by foreign exchange traders. Following the signing of the Dayton Peace Agreement in 1995, Bosnia and Herzegovina established a currency board pegged to the Deutschmark (since 2002 replaced by the Euro).

-       Currency boards have advantages for small, open economies that would find independent monetary policy difficult to sustain. They can also form a credible commitment to low inflation.

MEMBERS OF THE MONETARY BOARD FROM 1949 - present

1949

Hon. Jaime Fernandez, Presiding officerSecretary of finance

Hon. Miguel Cuaderno, Sr.Governor, Central bank of the Philippines

Hon. Arsenio J. Jison (1957)President, Philippine National Bank

Hon. Eduardo Z. RomualdezChairman, Board of Governors

Rehabilitation Finance CorporationPresident, Philippine National Bank (1958)

Gregorio S. LicarosChairman, board of governors

Development Bank of the Phils.

Hon. Vicente G. Sinco (1957)Hon. Amando M. Dalisay (1957)

Hon. Jaime C. Velasquez (1957-1958)Roberto T. Villanueva (1958)

Gaudencio E. Antonino (1958)Antonio De Las Alas

Jose LeidoLeonides S. Virata

1961

Hon.Dominador R. Aytona, Presiding OfficerSecretary of finance

Andres V. CastilloGovernor, Central Bank of the Phils.

Eduardo Z. RomualdezPresident, Philippine National Bank

Gregorio S. LicarosChairman, Board of GovernorsDevelopment Bank of the Phils.

Marcel S. BalatbatMariano B. Penaflorida

Hon.Rufino G. HechanovaSecretary of finance

Rafael S. RectoPresident, PNBPablo Lorenzo

Chairman, Board of governorsDevelopment bank of the Phils.

Ernesto V. SantosBelen Enrile-Gutierrez

1969

Hon. Eduardo Z. Romualdez, presiding officerSecretary of finance

Hon. Alfonso CalalangGovernor, CBP

Hon. Roberto S. BenidictoPresiding, PNB

Hon. Gregorio S. LicarosChairman, board of governors

Development bank of the Phils.

Hon. Ramon Mitra Sr.Hon. Belen Enrile –Gutierrez

Hon. Cesar c. Zalamea

Gregorio s. Licaros – chairmanGovernor, CBP

Cesar E.A. VirataSecretary of finance

Gerardo P. SicatDirector-general

National economic and Development Authority

Roberto V. OngpinChairman, Board of investment

Cesar C. Zalamea

1986

Hon. Jose B. Fernandez Jr.Governor

Hon. Jaime OngpinMinister of Finance

Hon. Solita Collas-MonsodDirector-general

National Economic and Development Authority

Hon. Jose Concepcion, Jr.Hon. Alberto G. RomuloMinister of the Budget

Hon. Cesar Buenaventura

Members:Vicente R. Jayme

Secretary of finance

Jose S. Concepcion Jr.Chairman, Board of Investment

Guillermo N. CaragueSecretary of budget and management

Solita C. MonsodSecretary of Economic Planning and

Director-general, NEDA

Luis F. LorenzoPrivate sector representative

(President and chairman, DavaoLapanday group of companies)

Jesus V. Ayalaprivate sector representative

(President and chairman,Fruits Corp., chairman, JVAManagement Corporation)

1992

Jose L. Cuisia Jr.Chairman

Governor, CBP

Ramon R. Del Rosario, Jr.Secretary of Finance

(Assumed position June 30, 1992 Vice Jesus P. Estanislao)

Rizalino S. NavarroChairman, Board of Investments

(Assumed position June 30, 1992 Vice Lilia R. Bautista)

Salvador M. Enriquez, Jr.Secretary of budget and management

(Assumed position Feb.12, 1992 Vice Guillermo N. Carague)

Cielito F. HabitoDirector- General, NEDA

(Assumed position June 30, 1992Vice Cayetano W. Paderanga, Jr.)

Renato L. Paras

Private sector representative

(Assumed position Feb.12, 1992 Vice Jesus V. Ayala)

Jose P. PardoPrivate sector representative

(Assumed position Sept.23, 1992)

1996

Gabriel C. SingsonGovernor

Members:Guillermo N. Carague

Cayetano W. Paderanga, Jr.Vicente B. Valdepenas, Jr.

Cesar B. BautistaTeodoro B. MontecilloAurelio O. Periquet, Jr.

2004

Rafael B. BuenaventuraGovernor

Members;Juanita D. Amatong

Antonio L. Alindogan, Jr.Juan Quintos, Jr.

Mielito S. Salazar, Jr.Vicente B. Valdepenas, Jr.

Fe B. Barin

2007

Amando M. Tetangco Jr.Governor

Members:Romulo Neri

Vicente B. Valdepenas, Jr.Raul A. Boncan

Juanita D. Amatong

Nelly F. VillafuerteAlfredo C. Antonio

2010

Amando M. Tetangco Jr.Governor

Members:Juanita D. AmatongAlfredo C. Antonio

Raul A.BoncanIgnacio R. BunyePeter B. Favilla

Nelly F. Villafuerte

The Monetary Board

The powers and function of Bangko Sentral are exercised by its Monetary Board, which has seven members appointed by the President of The Philippines. Under the New Central Bank Act, one of the government sector members of the Monetary Board must also be a member of the Cabinet designated by the President.

The New Central Bank Act establishes 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 years and may only be removed for cause.

The Monetary Board meets at least once a week. The Board may be called to a meeting by the Governor of the Bangko Sentral or by two (2) other members of the Board. Usually, the Board meets every Thursday but on some occasions, it convenes to discuss urgent issues.

The major functions of the Monetary Board include the power to:

1. Issue rules and regulations it considers necessary for the effective discharge of the responsibilities and exercise of the powers vested in it;

2. Direct the management, operations, and administration of Bangko Sentral, organize its personnel and issue such rules and regulations as it may deem necessary or desirable for this purpose;

3. Establish a human resource management system which governs the selection, hiring, appointment, transfer, promotion, or dismissal of all personnel;

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

5. Indemnify its members and other officials of Bangko Sentral, including personnel of the departments performing supervision and examination functions, against all costs and expenses reasonably incurred by such persons in connection with any civil or criminal action, suit or proceeding, to which any of them may be made a party by reason of the performance of his functions or duties, unless such members or other officials is found to be liable for negligence or misconduct.

TERMS OF THE MONETARY BOARD MEMBERS

R.A 265 Section 5. Composition of the Monetary Board. - The powers and functions of the Central Bank shall be exercised by a Monetary Board, which shall be composed of seven members, as follows:

a) The Secretary of Finance, who shall preside at the meetings of the Monetary Board. Whenever the Secretary of Finance is unable to attend a meeting of the Board, the Undersecretary of Finance shall act as his alternate, but shall not preside.

b) The Governor of the Central Bank, who shall preside at the meetings of the Board in the absence of the Secretary of Finance. The Governor shall be appointed for a term of six years by the President of the Philippines with the consent of the Commission on Appointments. Whenever the Governor is unable to attend a meeting of the Board, the ranking deputy-governor shall act in his stead.

c) The President of the Philippine National Bank, whose alternate shall be the senior vice-president of said bank.

d) The Chairman of the Board of Governors of the Rehabilitation Finance Corporation, whose alternate shall be the ranking governor of said corporation.

e) Three other members, to be appointed for terms of six years by the President with the consent of the Commission on Appointments: Provided, however, That the first members appointed under the provisions of this subsection shall have terms of office of two, four and six years, respectively.

R.A 7653 Section 6. Composition of the Monetary Board. - The powers and functions of the Bangko Sentral shall be exercised by the Bangko Sentral Monetary Board, hereafter referred to as the Monetary Board, composed of seven (7)

members appointed by the President of the Philippines for a term of six (6) years. The seven (7) members are:

a. the Governor of the Bangko Sentral, who shall be the Chairman of the Monetary Board. The Governor of the Bangko Sentral shall be head of a department and his appointment shall be subject to confirmation by the Commission on Appointments. Whenever the Governor is unable to attend a meeting of the Board, he shall designate a Deputy Governor to act as his alternate: Provided, That in such event, the Monetary Board shall designate one of its members as acting Chairman; b. a member of the Cabinet to be designated by the President of the Philippines. Whenever the designated Cabinet Member is unable to attend a meeting of the Board, he shall designate an Undersecretary in his Department to attend as his alternate; and c. five (5) members who shall come from the private sector, all of whom shall serve full-time: Provided, however, That of the members first appointed under the provisions of this subsection, three (3) shall have a term of six (6) years, and the other two (2), three (3) years.

QUALIFICATIONS

   - The members of the Monetary Board must be natural-born citizens of the Philippines, at least thirty-five (35) years of age, with the exception of the Governor who should at least be forty (40) years of age, of good moral character, of unquestionable integrity, of known probity and patriotism, and with recognized competence in social and economic disciplines.

DISQUALIFICATIONS

   - In addition to the disqualifications imposed by Republic Act No. 6713, a member of the Monetary Board is disqualified from being a director, officer, employee, consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which is subject to supervision or examination by the Bangko Sentral, in which case such member shall resign from, and divest himself of any and all interests in such institution before assumption of office as member of the Monetary Board.

CONTENTS OF M.O # 148

MALACAÑANGMANILA

MEMORANDUM ORDER NO. 148

PRESCRIBING THE SALARY OF THE GOVERNOR AND THE MEMBERS OF THE MONETARY BOARD OF THE

BANGKO SENTRAL NG PILIPINAS

Whereas, in compliance with the mandate of the Constitution to create an independent central monetary authority, Congress enacted Republic Act No. 7653, establishing the Bangko Sentral ng Pilipinas as an independent and accountable body corporate which shall enjoy fiscal and administrative autonomy;

Whereas, the economic development of the nation shall be greatly dependent upon the success or failure of the Bangko Sentral ng Pilipinas as it is mandated to provide policy directions in the areas of money, banking, and credit, and shall have supervision over the operations of banks and exercise such regulatory powers provided in said law and other pertinent laws over the operations of finance companies, quasi-banks and other institutions performing similar functions;

Whereas, the powers and functions of the Bangko Sentral ng Pilipinas, shall be exercised by the Monetary Board which shall be composed of the Governor of the Bangko Sentral ng Pilipinas who shall be the Chairman, a member of the Cabinet, and five (5) other members from the private sector who shall serve full time;

Whereas, the said law provides that the salary of the Governor and the members of the Monetary Board from the private sector shall be fixed by the President of the Republic of the Philippines at a sum commensurate to the importance and responsibility attached to the position;

Whereas, considering the importance of the mandate and purpose of the Monetary Board, it is in the public’s interest that the best qualified and the most competent should serve in the Monetary Board;

Whereas, the Governor and the full-time members of the Monetary Board are required to limit their professional activities to those pertaining directly to their positions, and as such may not accept, save in the instances provided in the law, any other employment, whether public or private, remuneration or ad honorem; and

Whereas, it is therefore imperative that the salary and other emoluments of the Governor and members of the Monetary Board be comparable and competitive to those received by directors or officers of equivalent rank of leading commercial banks and other financial institutions here and in other countries.

Now, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order that:

1. The salary of the Governor of the Bangko Sentral ng Pilipinas shall be One Hundred Fifty Thousand Pesos (Php 150,000.00) a month, and that each of the full-time members from the private sector of the Monetary Board shall be One Hundred Twenty Thousand Pesos (Php 120,000.00) a month.

2. The said salaries shall be exclusive of any allowances which are normally granted government officials as the Monetary Board may fix: Provided, however, that said allowances shall not exceed ten percent (10%) of the respective salaries of the members of the Monetary Board.

This order shall take effect immediately.

Done in the City of Manila, this 15th day of July in the year of Our Lord, Nineteen Hundred and Ninety-Three.

(Sqd.) FIDEL V. RAMOSPresident of the Philippines

1987 Philippine Constitution

Article XII: National Economy and Patrimony

Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions.Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central monetary authority.

Architecs of R.A 7653

-       In accordance with a provision in the 1987 Constitution, President Fidel V. Ramos signed Republic Act No. 7653.

Gabriel Singson Margarito ‘ Gary ‘ B. Tevez Sec. Alberto G. RomuLo Sen. Francisco ‘kit’ Tatad. Sen. Raul Roco.

ORIGINAL LOCATION OF CBP

Central Bank of the Philippines which started its operation on January 3, 1949 was located in Intendencia Building Intramuros, Manila.

 Background History:

The Aduana was the custom house during the Spanish regime. The structure was built from 1823 to 1829 based on the designs of Spanish engineer Tomas Cortes. The 1863 earthquake left the structure unsound that it was ordered to be demolished in 1872. The Custom offices were moved across the Pasig River to the San Nicholas area.

A new building was built in 1876 to house some of the Custom offices, the Intendencia General de Hacienda, the Treasury and the new Casa de Moneda (Mint). The building became popularly known as the Intendencia or civil administration office.

During the American Period, Senate President Manuel Luis Quezon’s office was housed in the Intendencia (while Speaker Sergio Osmena occupies the Ayuntamiento). The building was damaged by the Japanese bombs in 1941 and by the American artillery in 1945.

The Intendencia was restored to house offices of the Central Bank, the National Treasury and the Commission on Elections until a fire left it in ruins in 1979.

The Bangko Sentral ng Pilipinas (BSP, translated as Central Bank of the Philippines) is the central bank of the Republic of the Philippines. It was rechartered on July 3, 1993, pursuant to the provisions of the 1987 Philippine Constitution and the New Central Bank Act of 1993. The BSP was established on January 3, 1949, as the country’s central monetary authority.