Unit I: Introduction to Financial Systems and

Financial Market
1. Nature and Importance of Financial
System

APK 2. Elements of Financial System

3. Nature and Importance of Financial
Market
4. Money Market vs. Capital Market
5. Primary Market vs. Secondary Market
Unit II: Philippine
Financial System
By: Joycelyn P. Ituriaga, MBA
 At the end of the unit, student
is expected to:
• describe the role of Bangko Sentral
Teaching ng Pilipinas in the Financial Market,

Learning • describe the evolution of currency

and instruments used in financial

Objectives markets,
• set their personal target of inflation
based on the information made
available to them, and
• correlate the roles of different
agencies in the financial market
environment.
Topic Outline
Unit II: Philippine Financial System
• Role of Bangko Sentral ng Pilipinas and Monetary Board
a. History of Currency and Notes
b. Financial Reporting of Banking Institutions
c. Monetary Policy
d. Financial Regulation
History of Banking
in the Philippines
Unit II: Philippine Financial System
 GALLEON TRADE

The first organized credit institutions were

established in the Philippines during the 16th
century Spanish colonial era. These were
the OBRAS PIAS.
 In 1869, the
opening of
the Suez
Canal
facilitated
trade
between the
Philippines
and Europe.
The American Bank was
first to open a branch in
1901. However, it was
placed under
receivership by the Insular
Treasurer for making
doubtful loans after only 4
years of operations.
In 1916, the Philippine National Bank was
established with the Philippine Government as the
majority stockholder.
At the turn of the 20th
century, the Americans
established the Guaranty
Trust Corporation (GTC) and
International Banking
Corporation (IBC). The
existence of GTC was short-
lived, while IBC was
eventually taken over by the
National City Bank of New
York (now known as
Citibank). In 1918, the
Manila branch of the
Yokohama Specie Bank was
given license to do business
in the Philippines.
Between 1935 to 1946, more
foreign bank branches were
established in the Philippines.
These include the Bank of
Taiwan, and the Nederlandsche
Indische Handelsbanks. In 1939,
the government created the
Agricultural and Industrial Bank
to absorb the functions of the
National Loan and Investment
Board and to harness
government resources.
The Philippine Bank of Communications is the first bank with genuine Filipino private capital. However,
it was temporarily closed at the outbreak of WWII.
Only Filipino-owned and Japanese banks were allowed to operate during WWII; The Chartered Bank
of India, Australia, and China, HSBC, and the National City Bank of New York were all treated as
enemy properties and placed under liquidation by the Japanese Military Government.
 On the other hand, the Nampo Kaihatsu Kinko (Southern
Development Bank) opened a Manila branch in 1942 and acted
as the Japanese government’s fiscal agent in the Philippines.
After the liberation, all domestic banks that operated during the
Japanese occupation were unable to reopen because the
greater part of their assets consisted of worthless Japanese war
notes, bonds, and obligations of the Japanese-sponsored
republic, and balances with Japanese banks.
In 1947, a branch of the Bank of America was allowed to establish
a branch in Manila and in the following year, it absorbed the
assets and liabilities of the local branch of the Nederlandsche
Indische Handelsbanks.
In 1952, the Rural Bank
Act was enacted and
two years later, the
Agricultural and Industrial
Bank merged with the
Reconstruction and
Rehabilitation Fund to
form the Development
Bank of the Philippines.
Reference:
• History of Banking in the Philippines | Banks | Banking
(scribd.com) retrieved June 2021
End of module
Thank you.