Dennis Tuble II BSBA FM 3 – B

Assignment 5 & 6- Individual: Key function of the BSP

There are different risks that a country faces, especially to governments who are responsible for giving
the state, rules and regulations which are then implemented for it to work cooperatively. The
government set these rules and regulation which are then disseminated to the economy or to the
people of the state for them to have a set of cornerstone or basis. Risks like inflation can really affect the
economy which is why central banks help to alleviate these risks by stabilizing the flow of money, the
exchange rate and etc. Reduce the potential effects of global food market uncertainties, higher domestic
food prices due to supply constraints, additional increases in transportation costs due to high oil prices,
and larger-than-expected wage adjustments that may have an impact on people's ability to maintain
their standard of living.

Price stability, financial stability, and payments and settlements are the three main responsibilities of
the Bangko Sentral ng Pilipinas (BSP), as of its establishment in 1993 (which was somewhat revised
under the "New Central Bank Act of 1993 (1) Price stability is the main goal of the BSP as well as of the
individual central banks around the world. To combat the risk of inflation during the cycle, they
implemented policy rates that rise over time; this action is the new "monetary policy" that was
implemented. By doing this, inflation would be slower and the risk from the increase would be lower
overall. Nonetheless, it would be expected that banks will raise their own lending rates, which might
result in borrowing becoming more expensive (2) Establishing financial stability is also essential to
creating a productive and effective economy. To do this, it is important to make sure that the nation's
foreign exchange regulatory framework continues to be suitable for the cycle's requirements and to take
action to address any new issues or concerns. They also put into practice various "Guidelines to banking
institutions to strengthen financial capabilities and integrity and to continue the secured operation to
maintain the cycle of finance, through these implementations this can protect the financial stability of
the economy from shocks and disruptions in the economy itself or even from the effects of an economic
collapse or recession in other countries. (3) All financial systems in the nation that are under the control
of the central bank must perform the function of payments and settlements in order for them to
operate effectively (BSP). They provide a way for money to be transferred between banks and other
entities to meet payment commitments stemming from commercial and financial transactions across
the whole economy. An efficient, secure, and dependable payment system that minimizes the cost of
exchanging goods and services is essential to the effective execution of monetary policy as well as the
smooth operation of the money and capital markets.