WARM-UP (PRE-ACTIVITY)

Read the following references about ASEAN Monetary Policy and Central Banking fill up the column the
name of the present Central Bank Governor and give brief description of their respective monetary policy.

Governor

Headquarters BSP Complex, Roxas Boulevard, Manila,

Philippines Benjamin Diokno
Coordinates 14°33′39″N 120°59′18″ECoordinates: 14°33′39″N
120°59′18″E Monetary Policy:
Established January 3, 1949; 71 years ago (as Central Bank The primary objective of BSP's
of the Philippines) July 3, 1993; 27 years ago (re-established due monetary policy is to promote price
to the New Central Bank Act) stability because it has the sole ability
Ownership 100% state ownership[1] to influence the amount of money
Governor Benjamin Diokno circulating in the economy. In doing so,
Central bank of Government of the Philippines other economic goals, such as
Currency Philippine peso PHP (ISO 4217) promoting financial stability and
Reserves US$81 billion[2] achieving broad-based, sustainable
Bank rate 3.50% economic growth, are given
Preceded by Philippine National Bank (1916-1949) Central consideration in policy decision-
Bank of the Philippines (1949-1993) making.
Website www.bsp.gov.ph

Thailand central bank Featured snippet from the web The Bank
of Thailand (BOT) (Thai: ธนาคารแห่งประเทศไทย) is the central
bank of Thailand. Dr. Sethaput Suthiwart-Narueput
Central bank of: Kingdom of Thailand
Reserves: 149 290 million USD Monetary Policy:
Currency: Thai baht; THB (ISO 4217) Central Bank rate maintained at
record low in September. At its 23
September meeting, the Monetary
Policy Committee of the Bank of
Thailand (BoT) held the policy rate at
a record low of 0.50%, having cut the
rate by 75 basis points since the start of
the year.
 Nor Shamsiah Mohd Yunus

KUALA LUMPUR: Malaysia's reserves remained usable as at Monetary Policy:

end-March 2019, with official reserve assets at US$103.01 The Monetary Policy Committee
billion (RM426. 19 billion), in accordance with the International (MPC) of Bank Negara Malaysia
Monetary Fund's Special Data Dissemination Standard format decided to maintain the
Overnight Policy Rate (OPR) at 1.75
percent. The global economy continues
to improve, with the easing of
containment measures across more
economies and strong policy support.

Reserves: US$273.1 billion

Chairman: Tharman Shanmugaratnam
Bank rate: 1.67% Tharman Shanmugaratnam
Currency: Singapore dollar; SGD (ISO 4217)
History · List of Chairmen · Issuing Banknotes and ... · Monetary Policy:
Singapore FinTech ... Monetary policy in Singapore is
centred on managing the trade-
weighted exchange rate with the
objective to ensure price stability
over the medium term as a basis for
sustainable economic growth.

Vietnam central bank Nguyen Thi Hong

Featured snippet from the web
The State Bank of Vietnam (Vietnamese: Ngân hàng Nhà nước
Việt Nam; French: Banque d'État du Viêt Nam) is the central
bank of Vietnam. It currently holds an about 65% stake of
VietinBank - the country's largest listed bank by capital.
Reserves: 27 880 million USD
Monetary Policy:
On 13 May, the State Bank of Vietnam
(SBV) reduced a host of interest rates,
with the refinancing rate being cut from
5.00% to 4.50%. The move came after
Currency: Vietnamese đồng; VND (ISO 4217) Ownership: sizeable monetary easing in March,
100% state ownership bringing total cuts to the refinancing
rate so far this year to 150 basis points.

Perry Warjiyo

Monetary Policy:
The BI Board of Governors agreed on
18th and 19th May 2020 to hold the BI
7-Day Reverse Repo Rate at 4.50%,
while also maintaining the Deposit
Facility (DF) and Lending Facility (LF)
rates at 3.75% and 5.25%.
Bank Indonesia is taking the following
actions:
1. Providing liquidity for the banking
industry in terms of restructuring
MSME loans and ultra-micro
enterprises with formal loans;
2. Considering implementation of Reserve
Requirement Remuneration for all
Central Bank of Indonesia banks;
Reserve USD127.9 billion at 3. Strengthening monetary operations and
Islamic financial market deepening
through Sharia-Compliant Liquidity
Facilities (FLisBI), Sharia-Compliant
Liquidity Management (PaSBI) and
Sharia-Compliant Interbank Fund
Management Certificates (SiPA);
4. Accelerating implementation of the
digital economy and finance as part of
the national economic recovery efforts
through collaboration between the
banking industry and FinTech to
expand MSME and public access to
economic and financial services.

HeadquartersNa ypyidawEstablish
ed3 April 1948 (as Union
BankofBurma)Ownership100%stateownership[1]GovernorKya
w Kyaw U Kyaw Kyaw Maung
Maung[2]CentralbankofMyanmar(Burma)CurrencyMyanmar
kyat Monetary Policy:
MMK (ISO 4217)Preceded byUnion Bank of Burma
People’s Bank of Union Bank of
BurmaWebsite www.cbm.gov.mm
Brunei Central bank The Monetary Authority of sBrunei
Darussalam (Malay: Autoriti Monetari Brunei Darussalam,
abbreviated as AMBD ) is the central bank of Brunei. It was
established under the Autoriti Monetari Brunei Darussalam
Order, 2010, and began operations on January 1, 2011.
Currency: Brunei dollar; BND (ISO 4217)
Reserves: 2 890 million USD
Chairman: Haji Al-Muhtadee Billah
In order to avoid excessive short-term
volatility in the exchange rate and to build
foreign currency reserves, the CBM is
working with the IMF to conduct rule-
based intervention in the foreign exchange
market. The CBM is allowing more foreign
banks and subsidiaries to participate in the
local market, although in a way that
protects domestic banks. With a view to
strengthening the capital base, technology
and governance of our banks, the CBM
recently allowed foreign investors to invest
up to 35% of a local bank’s capitalisation
via a joint venture. In order to strengthen
the regulatory and supervisory
environment, the CBM has issued a series
of prudent regulations and directives over
the past two years. Notably, with technical
assistance from the IMF, an “off-site
supervision guide and risk-assessment
matrix” was issued to adopt risk-based
supervision by 2020
Royal Highness Prince Haji Al-
Muhtadee Billah
Monetary Policy:
AMBD is currently implementing
initiatives under the Digital Payment
Roadmap for Brunei Darussalam 2019-
2025 which, among others, calls for the
establishment of a Payment Hub
infrastructure to enable customers to make
digital payments. AMBD will be taking a
leading role in the implementation of the
Digital Payment Hub Project, working
together with Bank Islam Brunei
Darussalam (BIBD), Baiduri Bank and
Perbadanan Tabung Amanah Islam Brunei
(TAIB). AMBD will continue to engage
relevant stakeholders such as the Digital
Economy Council in ensuring that the aims
of the Project are aligned with other
national initiatives.
 Xonexay Sithphaxay
Headquarters Vientiane, Laos
Coordinates 17.9658°N 102.6070°ECoordinates: 17.9658°N Monetary Policy:
102.6070°E Under the bank's Decision on Currency
Established 7 October 1968; 51 years ago Exchange Business, the Bank of the
Ownership 100% state ownership[1] Lao PDR has made the business
Governor Xonexay Sithphaxay licensing and approval process
Central bank of Laos transparent as part of measures to
Currency Lao kip encourage money exchange service
Reserves 970 million USD[1] providers to obtain an operating
Website http://www.bol.gov.la license. According to the rules,
currency exchanges must not offer
services outside of their declared
business venues.

Headquarters Phnom Penh, Cambodia

Established 23 December 1954; 65 years ago
Ownership 100% state ownership[1]
Governor Chea Chanto
Central bank of Cambodia Chea Chanto
Currency Riel
Reserves 6 760 million USD[1] Monetary Policy:
Website [2] The monetary policy instruments used
to achieve price stability is setting
reserve requirement rate and
conducting foreign exchange
intervention. At the same time, the
National Bank of Cambodia is
developing additional monetary policy
instruments to enhance monetary
policy effectiveness through issuing
Negotiable Certificates of Deposit
(NCDs), developing interbank and
monetary markets, promoting the use
of riel, and so on.
Banco Central de Timor-Leste is the central bank of East Timor
located in its capital Dili. BCTL was formally established on 13
September 2011, replacing the Banking and Payments Authority
of Timor-Leste and the Central Payments Office. It is Abraão de Vasconcelos
responsible for the monetary policy. Wikipedia
Founded: 13 September 2011 Monetary Policy:
Jurisdiction: Timor-Leste The main Functions:
Central bank of: East Timor
Reserves: 430 million U  conducting policies to maintain
domestic price stability
 fostering the liquidity and
solvency of a stable market-
based banking and financial
system
 providing the foreign exchange
policy
 promoting a safe, sound, and
efficient payment system
 Supporting the general
economic policies of the
government.

ESSAY

1. Explain the fiscal policy actions used to stimulate the economy during the recession,
what is this type of fiscal policy called?

This is called Expansionary Fiscal Policy; this type of policy is usually

undertaken during recessions to increase the level of economic activity. In this instance,
the government spends more money than it collects in taxes. It is used to kick-start the
economy during a recession. It boosts aggregate demand, which in turn increases output
and employment in the economy. In pursuing expansionary policy, the government
increases spending, reduces taxes, or does a combination of the two. Since government
spending is one of the components of aggregate demand, an increase in government
spending will shift the demand curve to the right. A reduction in taxes will leave more
disposable income and cause consumption and savings to increase, also shifting the
aggregate demand curve to the right. An increase in government spending combined with
 a reduction in taxes will, unsurprisingly, also shift the AD curve to the right. The extent
of the shift in the AD curve due to government spending depends on the size of the
spending multiplier, while the shift in the AD curve in response to tax cuts depends on
the size of the tax multiplier. If government spending exceeds tax revenues, expansionary
policy will lead to a budget deficit. The logic behind this approach is that when people
pay lower taxes, they have more money to spend or invest, which fuels higher demand.
That demand leads firms to hire more, decreasing unemployment, and to compete more
fiercely for labor. In turn, this serves to raise wages and provide consumers with more
income to spend and invest. It's a virtuous cycle, or positive feedback loop.  Rather than
lowering taxes, the government may seek economic expansion through increases in
spending (without corresponding tax increases). By building more highways, for
example, it could increase employment, pushing up demand and growth.

2. Explain the monetary policy actions used to stabilize the economy in times of inflation.
What is this type of monetary policy called?

This is called Expansionary Monetary Policy, during a recession, by buying

government bonds and lowering reserve requirements, the discount rate, and the interest
paid on required and excess reserves, monetary policy attempts to increase consumer
spending and business investment, which should lead to an increase in aggregate demand
and an increase in real GDP, the price level, and employment. Central banks use
expansionary monetary policy to lower unemployment and avoid recession. They
increase liquidity by giving banks more money to lend. Banks lower interest rates,
making loans cheaper. Businesses borrow more to buy equipment, hire employees, and
expand their operations. Individuals borrow more to buy more homes, cars, and
appliances. That increases demand and spurs economic growth.

3. Explain the Fiscal Policy actions used to stabilize the economy in times of inflation.
What is this type of fiscal policy called?

This is called Contractionary Fiscal Policy, during times of inflation, by raising

taxes or decreasing government spending, fiscal policy attempts to decrease consumer
spending and business investment, which should lead to a decrease in aggregate demand
and a decrease in real GDP, the price level, and employment. It is when the government
 either cuts spending or raises taxes. It gets its name from the way it contracts the
economy. It reduces the amount of money available for businesses and consumers to
spend. Additionally, Contractionary fiscal policy does the reverse of expansionary fiscal
policy, it decreases the level of aggregate demand by decreasing consumption, decreasing
investments, and decreasing government spending, either through cuts in government
spending or increases in taxes. The aggregate demand/aggregate supply model is useful
in judging whether expansionary or contractionary fiscal policy is appropriate. The
purpose of contractionary fiscal policy is to slow growth to a healthy economic level.
When governments cut spending or increase taxes, it takes money out of consumers'
hands. That also happens when the government cuts subsidies, transfer payments
including welfare programs, contracts for public works, or the number of government
employees. Shrinking the money supply decreases demand. It gives consumers less
purchasing power. That reduces business profit, forcing companies to cut employment. 

4. What are the common goals of both fiscal and monetary policy?
The common goals of both fiscal and monetary policy are to achieve or maintain
full employment, to achieve or maintain a high rate of economic growth, and stabilize
prices and wages. Both fiscal and monetary policy play a large role in managing the
economy and both have direct and indirect impacts on personal and household finances.
Fiscal policy involves tax and spending decisions set by the government, and will impact
individuals' tax bill or provide them with employment from government projects.
Monetary policy is set by the central bank and can boost consumer spending through
lower interest rates that make borrowing cheaper on everything from credit cards to
mortgages.

SELF-EVALUATION
Usually Sometimes Seldom Never
3 2 1 0

I am able to grasp the comparison of Monetary and 2

Fiscal Policy

I avoid confusing Contractionary and Expansionary. 2

 I learn the Monetary Policy Tools 3

I understand the Inflation Target 2

I learn that the Central banks use contractionary

monetary policy to reduce inflation 2

I also learned that Central banks use expansionary

monetary policy to lower unemployment and avoid 3
recession.

TOTAL 6 8

REFLECTION LOG

MONETARY POLICY AND FISCAL POLICY

Topic: Module 2 Importance of Central Bank to the Financial services industry and to the monetary
stability of the economy

Student Name: SANDRINI M. SALINAS

Purpose: Student monitors their learning through reflection prompts. The log documents growth and
learning overtime in the student’s words. The log is used as feedback on the topics being discussed and
student learning on the subject matter.

Instruction: Log in your reflections on the spaces provided following the prompts. Submit a copy as a
formative evaluation and retain a copy for you to compile as partial requirement of the course.

Reflection Prompts Reflection Logs Remarks/Suggestions

1. In this topic, I learned
In this topic, I learned that
that………… Central Bank is important to the
Financial services industry and to
the monetary stability of the
economy.
2. The most useful thing The most useful thing in this
in this topic topic was to be able to
was………………….. understand the difference
between Contractionary and
Expansionary monetary policy as
well as the difference also
between Monetary Policy and
Fiscal Policy.
3. The main thing I want The main thing I want to find out
 to find out more about more about is during this
is……………………. pandemic in what way or how
the following contractionary and
expansionary monetary policy
can work as one to maintain the
country’s economy.
4. I might have learned I might have learned more from
more from this lessons this lesson if it was discussed
if…………… thoroughly.
5. One thing when I am One thing when I am not sure
not sure about. about are if I thoroughly or fully
grasp the whole lesson based on
what should it be mean especially
when it was just my own
understanding.