GROUP 2

REPORT TITLE: MONETARY STABILITY SECTOR

POINTS TO RESEARCH: Current monetary policies and how BSP aims to improve the economy using the said
policies; monetary tools, and monetary/economics plan for the future.
What is all about Monetary Stability Sector?

 Monetary stability is a synonym for price stability. Price stability refers to a stable price level or a low
level of inflation and not to stable individual prices.
 The financial system is a key a part of our economy. It includes, for example, banks insurance
companies and financial markets.
 The financial system helps money flow through the economy when and where it is needed. For this
essential function to work well, we need the financial system to be stable.
Monetary Policy in the Philippines

 The monetary policy in the Philippines is under changing approach because over the years there are
changes in monetary policy because one monetary policy per particular period of time may not be the
best monetary policy in the next years.
 Focus on maintaining a low level of inflation, that which is considered to be optimal, or at least would
allow the country to have ample economic growth. Its mains desire is to achieve price stability as the
ultimate end goal of the monetary policy.
3 Monetary Policy Tools- a tool used by the central bank to increase or decrease the money supply
*money supply- the money that circulates in the economy
1. The Reserve Requirement
2. Open Market Operations
3. The Discount Rate
Reserve Requirement- this are the amount of funds that a bank holds in reserve to ensure that it is able to
meet liabilities in case of sudden withdrawals.
Open Market Operations- refers to a central bank buying or selling short term treasuries and other securities
in the open market in order to influence the money supply.
*open market- private businesses that are not controlled by the government.
Discount Rate- it is the interest rate at which commercial banks and other depository institutions can borrow
reserves from regional.
Economic Plans for the Future

 Economist from the private sector expect inflation to be within the government’s inflation
target
 Domestic economic continues to improve
 They decided to maintain the key policy rate at 2%
 Their view is that inflation will be within 2%-4% target range over the next two years
 They kept the key policy interest rate unchanged