BANGKO SENTRAL NG PILIPINAS (BSP)  Monetary Board (MB)

NATURE OF BSP* COMPOSITION OF THE MONETARY BOARD*

 Independent central monetary authority  How many: 7 members
 Who appoints them: President of PH
CAPITALIZATION*  Term of MB member: 6 years
 Capital: P200B   Who are the 7 MB members:
 ***Who subscribes to BSP’s capital: Govt of 1. BSP Governor 
RP  Chairman of MB
 Extent of capital to be subscribed by govt:  ***Must be a head of a dept
Fully (100% of the capital)  ***Appointment is subject to
 Increase in capitalization: Funded solely from confirmation by Commission on
the declared dividends of BSP in favor of the Appointments
Natl Govt  Governor unable to attend board meeting:
 Declared dividends of BSP for Govt: They shall Gov shall designate a Deputy Gov to act as
be – his alternate and the MB shall designate
1. Deposited in a special account in the one of its members as acting Chairman
General Fund; and  2. Cabinet member of Pres (Public Sector)
2. Earmarked for the payment of BSP’s  Designated by Pres
increase in capitalization (Such payment  Cabinet member unable to attend: He
shall be released and disbursed shall designate an undersecretary in his
immediately and shall continue until the dept to attend as his alternate
increase in capitalization has been fully  DOF Sec
paid) 3. 5 members from the private sector all of
whom shall serve full-time
RESPONSIBILITY AND OBJECTIVE  Term of first 5 members from the private
1. Provide policy directions in the areas of sector:
money, banking and credit a. 3 members – 6 yrs
2. ***Supervision over the operations of banks b. 2 members – 3 yrs
and exercise such regulatory and examination
powers under the NCBA and other pertinent REAPPOINTMENT***
laws over quasi-banking operations of NBFI  Prohibition: No MB member may be
3. ***Regulatory and examination powers over reappointed more than once
money and payment system operators  In other words, there may be reappointment
4. Primary objectives:***  but only once
a. ***Maintain price stability conducive to a
balanced and sustainable growth of the VACANCIES
economy and employment  Vacancy shall be filled by appointment of a
b. Promote and maintain monetary stability and new member
the convertibility of peso  Grounds: DRR
5. Promote financial stability and closely work 1. Death
with the Natl Govt including, but not limited 2. Resignation
to, DOF, SEC, Insurance Commission and PDIC 3. Removal
6. Oversee the payment and settlement systems  Period of term: Only for the unexpired portion
in the PH, including critical financial market of predecessor
infrastructures, in order to promote sound and
prudent practices consistent with the QUALIFICATIONS N-35-GUKR*
maintenance of financial stability 1. Natural-born citizens of PH
7. In the attainment of the objectives, promote 2. At least 35 y/o 
broad and convenient access to high quality  XPN: BSP Gov must be at least 40 y/o
financial services and consider the interest of 3. Of good moral character
the general public 4. Of unquestionable integrity
5. Of known probity and patriotism
GOVERNING BODY OF BSP
 6. With recognized competence in social and
economic disciplines
DISQUALIFICATIONS/PROHIBITIONS OF BOD
MEMBERS UNDER THE NCBA AND RA 6713*
 Under the NCBA:***
1. MB member is DQed from being director,
officer, ee, consultant, lawyer, agent or
shareholder of any bank, QB or any other
institution which is subject to supervision
or examination by BSP
 Incompatible office: Such member shall
resign from, and divest himself of any and
all interests in such institution before
assumption of office as member of MB
2. MB members coming from the private sector
shall not hold any other public office or public
employment during their tenure (XPN: BSP
Gov and Cabinet member)
 Tenure: Time during which official
ACTUALLY holds office
 Term: Time FIXED BY LAW within which an
official must hold office
 Therefore: MB member may hold other
office/employment AFTER holding office
even if not finished 6-yr term
3. 1 yr before: No person shall be a member
of the MB if he has been connected
directly with any multilateral banking or
financial institution or has a substantial
interest in any private bank in PH within 1
yr before his appointment
4. 2 yrs after: No member of MB shall be
employed in any bank in PH within 2 yrs after
the expiration of his term
 XPN: MB member serves as an official
representative of the PH Govt to such
institution
 Under RA 6713 (Code of Conduct and Ethical
Standards for Public Officials and Employees)
1. Financial and material interest in any
transaction requiring the approval of their
office
2. Own, control, manage or accept
employment as officer, employee,
consultant, counsel, broker, agent, trustee
or nominee in any private enterprise
regulated, supervised or licensed by their
office unless expressly allowed by law
 This prohibition shall continue to apply
for a period of one (1) year after
resignation, retirement, or separation
from public office
3. Engage in the private practice of their
profession unless authorized by the
Constitution or law, provided, that such
practice will not conflict or tend to conflict
with their official functions
 1-yr prohibition from separation from
office does not apply
 XPN: MB member cannot practice his
profession in connection with any
matter before the office he used to be
with, in which case the one-year
prohibition shall likewise apply.
 However, under the NCBA, no
member of MB shall be employed in
any multilateral banking or financial
institution or private bank in PH within
2 yrs after the expiration of his term
4. Recommend any person to any position in
a private enterprise which has a regular or
pending official transaction with their
office
 This prohibition shall continue to apply
for a period of one (1) year after
resignation, retirement, or separation
from public office
5. MB member shall not use or divulge,
confidential or classified information
officially known to them by reason of their
office and not made available to the
public, either:
a. To further their private interests, or
give undue advantage to anyone
b. To prejudice the public interest.
6. MB members shall not solicit or accept,
directly or indirectly, any gift, gratuity,
favor, entertainment, loan or anything of
monetary value from any person in the
course of their official duties or in
connection with any operation being
regulated by, or any transaction which
may be affected by the functions of their
office.
 XPNs:
a. Acceptance and retention of a gift of nominal
value tendered and received as a souvenir or
mark of courtesy
b. Acceptance of a gift in the nature of a
scholarship or fellowship grant or medical
treatment
c. Acceptance of travel grants or expenses for
travel taking place entirely outside the PH
(such as allowances, transportation, food, and
lodging) of more than nominal value if such
acceptance is appropriate or consistent with
 the interests of the PH, and permitted by the
head of office, branch or agency to which he
belongs.
REMOVAL
 Who may remove MB Member: President of
PH (Reason: Pres was the one who appointed
the MB Members. Power to appoint includes
power to remove)
 Grounds:
1. Member subsequently becomes DQed
(See DQs above)
2. Becomes physically or mentally
incapacitated that he cannot properly
discharge his duties and responsibilities
and such incapacity lasted for more than 6
mos***
3. Guilty of acts or operations which are
fraudulent or illegal in character or which
are manifestly opposed to the aims and
interests of BSP
4. No longer possess the qualifications
TWO KINDS OF EXAMINATION BY BSP***
1. Regular (periodic) – at least 12 mos from the
last regular examination
2. Special – as the need arises upon vote of at
least 5 MB members
EXAMINATION; SAFE AND SOUND BASIS*
 Meaning (MORB): An investigation of an
institution under the supervisory authority of
the BSP to determine whether the institution
is operating on a safe and sound basis, inquire
into its solvency and liquidity, and assess the
effectiveness of its compliance function to
ascertain that it is conducting business in
accordance with laws and regulations
 Who examines operations of banks and QBs:
Supervising and examining department (SED)
head, personally or by deputy
 Scope of examination:
1. Bank
2. QB
3. Their subsidiaries and affiliates engaged in
allied activities
4. Other entities which are subject to BSP
supervision under the NCBA or other laws
 ***Interval of regular examinations: At least
12 mos from the last regular examination
 ***Special examination: May be conducted by
a vote of at least 5 MB members
 Full opportunity to examine: The institution
concerned shall afford to the head of the
supervising and examining dept and to his
authorized deputies full opportunity to
examine its books and records, cash and
assets and general condition and review its
systems and procedures at any time during
business hours when requested to do so by
BSP
 When may regular examination be conducted:
Any time during business hours
 Rule on the reports and papers relative to the
examination:
 GR: Confidential. Not open to inspection
by the public
 XPNs:
1. Publicity is incidental to the
proceedings authorized
2. Necessary for the prosecution of
violations in connection with the
business of such institutions
 Supervision fee: To answer for the costs of
supervision to be paid not later than May 31
of each year
 Refusal to permit examination: Fine of P30k
per day from the day of the refusal and for as
long as such refusal lasts without prejudice to
Sec 34 of NCBA (Fine of P50k-P2M and/or
imprisonment of 1yr-5yrs; administrative
sanctions)
SUPERVISORY POWERS OF BSP (GBL)
 The operations and activities of banks shall be
subject to the supervision of BSP
 Entities subject to supervision of BSP
1. Banks
2. QBs
3. Trust entities
4. Other financial institutions which under
special laws are subject to BSP supervision
 Scope of “Supervision”:
1. The issuances of rules of conduct or the
establishment of standards of operation
for uniform application to all institutions
or functions covered, taking into
consideration the distinctive character of
the operations of institutions and the
substantive similarities of specific
functions to which such rules, modes or
standards are to be applied
2. The conduct of examination to determine
compliance with laws and regulations if
the circumstances so warrant as
determined by the MB
3. Overseeing to ascertain that laws and
regulations are complied with
  “Overseeing”: Refers to a limited
investigation of an institution, or any
investigation that is limited in scope,
conducted to inquire into a particular area
or aspect of an institution’s operations, for
the purpose of overseeing that laws and
regulations are complied with, inquiring
into the solvency and liquidity of the
institution, enforcing prompt corrective
action, or such other matters requiring
immediate investigation: Provided, That:
a. Specific authorizations be issued by the
Deputy Governor of the appropriate sector of
the BSP; and  issued by the court enjoining the BSP from
b. Periodic summary reports on overseeings
conducted be submitted to MB.
4. Regular investigation which shall not be
oftener than once a year from the last date of
examination to determine whether an
institution is conducting its business on a safe
or sound basis: Provided, That the
deficiencies/irregularities found by or
discovered by an audit shall be immediately
addressed
5. Inquiring into the solvency and liquidity of the
institution
6. Enforcing prompt corrective action
SUPERVISION AND EXAMINATION BY BSP (NCBA)
 Power of BSP involved: Power of supervision
and to conduct regular or special examinations
 Entities subject to supervision and
examination power of BSP:
1. Banks
2. QBs
3. Their subsidiaries and affiliates
 “Subsidiary”: A corp more than 50% of the
voting stock of which is directly or indirectly
owned, controlled or held with power to vote
by a bank or QB
 “Affiliate”: A corp the voting stock of which, to
the extent of 50% or less, is owned by a bank
or QB or which is related or linked directly or
indirectly to such institution or intermediary
through common sholders or such other
factors
 Powers of department heads and examiners of
the supervising examining department:
1. Administer oaths to any director, officer,
or employee of any institution under their
respective supervision or subject to their
examination
2. Compel the presentation of all books,
docs, papers or records necessary in their
judgment to ascertain the facts relative to
the true condition of any institution as
well as to the books and records of
persons and entities relative to or in
connection with the operations, activities
or transactions of the institution under
examination (Subject to the laws
protecting the secrecy of bank deposits
and investments of private persons in debt
instruments issued by the Govt – RA 1405)
INJUNCTION OVER BSP’S EXERCISE OF EXAMINATION*
 GR: No restraining order or injunction shall be
examining any institution subject to BSP’s
supervision and examination
 XPN: There is convincing proof that the action
of BSP is plainly arbitrary and made in BF and
the petitioner or pff files with the clerk or
judge in which the action is pending a bond
executed in favor of BSP
 Injunction: Order mandating or enjoining a
particular act
RECEIVERSHIP/CONSERVATORSHIP v. EXAMINATION
(ON JUDICIAL INTERFERENCE)
RECEIVERSHIP/CONSERVATORSHIP EXAMINATION
Order of MB is final and executory. No restraining
The actions of the MB in order or
appointing a conservator or a injunction
receiver for a bank may not be shall be issued
restrained or set aside by the court by the court
enjoining the
BSP from
examining any
institution
subject to
BSP’s
supervision
and
examination
May be set aside by petition for May be
certiorari R65 on the ground of restrained (by
excess of jd or grave abuse of TRO or
discretion amounting to lack or injunction) if
excess of jd there is
convincing
proof that the
action of BSP
is plainly
arbitrary and
made in BF
and bond is
posted
“CURRENCY”*
 All Philippine notes and coins issued or
circulating by BSP in accordance with the
provisions of the NCBA

EXCLUSIVE ISSUE POWER (MONEY FUNCTION OF BSP)*

 ***BSP shall have the sole power and
authority to issue currency, within the
territory of the Philippines
 GR: 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 MB, might circulate as currency,
nor reproduce or imitate the facsimiles of BSP
notes
 XPN: Such person or entity obtains a prior
authority from the BSP
 Power given to BSP to enforce its exclusive
issue power:  BSP shall have the authority to
investigate, make arrests, conduct searches
and seizures in accordance with law, for the
purpose of maintaining the integrity of the
currency
 Penalty for violation: 5yrs-10yrs. If RPC
provides higher penalty, then that penalty
shall be imposed

LEGAL TENDER POWER*

 All notes and coins issued by the BSP shall be
fully guaranteed by the Government of the
Republic of the Philippines and shall be legal
tender in the Philippines for all debts, both
public and private
 GR: No limit on legal tender
 XPNs: Coins
1. 1-Piso, 5-Piso, 10-Piso – up to P1,000
2. Centavo denominations (1-Sentimo, 5-
Sentimo, 10-Sentimo, 25-Sentimo) – up to
P100

WHAT IS LEGAL TENDER*

 Notes and coins issued by BSP fully
guaranteed by the government