Professional Documents
Culture Documents
Pre Final Handouts
Pre Final Handouts
BASIC FINANCE
BMGT 24
Hi Class,
There are some terminologies that are uncovered by the group reporters which are
included in this summarized hand outs. Best of Luck!
-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.
Executive Management Services – the functional grouping of all units directly reporting to the
Monetary Board or to the Governor.
Monetary Boardexercises 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 PESO Security Features: (1) embossed prints, (2) serial number, (3) security fibers, (4)
watermark, (5) see-through mark, (6) concealed value, (7) security thread
500 PESO Security Features: (1) embossed prints, (2) serial number, (3) security fibers, (4)
watermark, (5) see-through mark, (6) concealed value, (7) security thread, (8) optically variable
device
1000-PESO Security Features: (1) embossed prints, (2) serialnumber, (3) security fibers,
(4) watermark, (5) see-through mark, (6) concealed value, (7) security thread, (8)
optically variable device, (9) optically variable ink
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.
The BSP Seal
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 payment 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.
Colors
1. The blue background signifies stability.
2. The stars are rendered in gold to symbolize wisdom, wealth, idealism, and high quality.
3. The white color of the eagle and the text for BSP represents purity, neutrality, and mental
clarity.
Shape
Round shape to symbolize the continuing and unending quest to become an excellent monetary
authority committed to improve the quality of life of Filipinos. This round shape is also
evocative of our coins, the basic units of our currency.
FUNCTIONS OF BSP
Under the New Central Bank Act of 1993, the BSP performs the following functions, all
of which relate to its status as the Republic’s central monetary authority.
1. LIQUIDITY MANAGEMENT - The BSP formulates and implements monetary policy
aimed at influencing money supply consistent with its primary objective to maintain price
stability.
2. 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.
3. LENDER OF LAST RESORT - The BSP extends discounts, loans and advances to
banking institutions for liquidity purposes.
4. 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 BSP is principally to ensure orderly
conditions in the market.
CLASSIFICATION OF BANKS
1. Central Bank - This bank acts as the leader of the banking system and money market of
the country by regulating money and credit.
- These banks are the bankers to the government, they are bankers' banks and
the ultimate custodian of a nations foreign exchange reserves.
2. Commercial Banks - A bank, which undertakes all kinds of ordinary banking business.
3. Industrial Bank - one which specializes by providing loans and fixed capital to
industrial concerns by subscribing to share and debenture issued by public companies.
4. Cooperative Bank - They are organized on cooperative principles of mutual help and
assistance.
5. Land Mortgage Bank –banks which supply long-term loans for a period up to 15 years
for development of land to improve agricultural yields.
6. Savings Banks - These are institutions which collect the periodical savings of the general
public. Their main object is to promote thrift and saving habits among the middle and
lower income sections of the society.
7. International/Foreign Banks - are those which are operating in different countries.
8. Rural Banks - Local level banking organizations operating in different States of any
country.
9. Domestic bank - the banks which working under its geographical boundaries.
10. Public banks – banks in which a state or public actors are the owners. It is a company
under state control.
PRESIDENTIAL DECREE No. 734 – indicates that vesting minors with the supervision of
their parents, the power to make savings and time deposits.
Senate Bill No. 613 - All movie, television, radio producers, including promotions
and advertising agencies, talent promoters, and other like entities, who in the course of business
hires, procures, or engages the services of an emancipated minor below eighteen (18) years of
age shall be required to deposit in the name of the said minor.
Types of insurance
• Auto insurance
• Gap insurance
• Health insurance
• Accident, sickness, and unemployment insurance
• Casualty
• Life
• Burial insurance
• Property
• Liability
• Credit
BANKING CORPORATION – Financial services specifically offered to corporations, such
as cash management, financing, underwriting, and issuing of stocks, bonds, or other instruments.
Retail Banking- Banking services for individual customers
Wholesale Banking- A large organization.
Investing equities - is risker than and definitely demands more than investing through mutual
funds.
Real Estate - is property consisting of land and the buildings on it.
Financial Stability – is defined in terms of its ability to facilitate and enhance economic
processes, manage risks, and absorb shocks.
Regulator – an official or body that monitors the behavior of companies and the level of
competition in particular markets.
Transparency – the full, accurate, and timely disclosure of information.
Deregulation – is the removal or simplification of government rules and regulations that
constrain the operation of market forces.
NBFI is a financial institution that does not have a full banking license or is not supervised by a
national or international banking regulatory agency. NBFIs facilitate services such as investment
risk pooling, contractual savings, and market brokering.
Multinational Bank-bank that has offices and operations across multiple countries.
Universal Bank - a banking system in which banks provides a wide variety of financial services
including both commercial and investment services.
FOUR TYPES of FINANCIAL STATEMENT
Income Statement, also known as the Profit and Loss Statement, reports the company's financial
performance in terms of net profit or loss over a specified period. Income Statement is composed of the
following two elements: Income and Expense
Statement of Financial Position, also known as the Balance Sheet, presents the financial position of an
entity at a given date.
Statement of Changes in Owner’s Equity - Is a financial statement that reports the changes in the equity
section of the balance sheet during an accounting period.
Cash Flow Statements - is a financial statement that shows how changes in balance sheet
1. Operating Activities - refer to the primary revenue-generating activities of a business
2. Investing Activities – include cash activities related to noncurrent assets.
3. Financing Activities - Shows investors the company’s financial strength.
Financial statement analysis involves the identification of the following items for a company's financial
statements over a series of reporting periods.
Global Banking – functions as an international banks transcend with the domestic bank because they link
savers and borrowers across different countries.
LEADERS OF FINANCIAL SYSTEM
NOTE: Study on outflow and inflow movement of cash on cash flow activities which will be discussed
further by the chapter 7 reporters on Tuesday.