Quiz #2

❖ Discuss in Chronological order the history of Philippine Central Bank.

1900 - Act. No. 52 was passed by the first Philippine Commission placing all
banks under the Bureau of Treasury. The insular Treasurer was authorized to
supervise and examine banks and banking activities.

Feb. 1929 - The Bureau of Banking under the Department of Finance took
over the task of banking supervision.

1939 - A bill establishing a central bank was drafted by Secretary of Finance

Manuel Roxas and approved by the Legislative. However, the bill was
returned by the US government, without action, to the Commonwealth
government.

1946 - A joint Philippine-American Finance Commission was created to study

the Philippine currency and banking system.

Aug. 1947 - A Central Bank council was formed to review the commission’s
report and prepare the necessary legislation for implementation.

Feb. 1948 - President Manuel Roxas submitted to Congress a bill

“Establishing the central Bank of the Philippines, defining its power in the
administration of the monetary and banking system, amending pertinent
provisions of the Administrative Code with respect to the currency and the
Bureau of Banking, and for other purposes.

15 June 1948 - The bill was signed into law as Republic Act no. 265 (The
Central back Act) by President Elpidio Quirino.

3 January 1949 - The Central Bank of the Philippines (CBP) was inaugurated
and formally opened with Hon. Miguel Cuaderno, Sr. as the first governor.

November 1972 - R.A. No. 265 was amended by Presidential Decree No. 72
to make the CBP more responsive to changing economic conditions.

January 1981 - Further amendments were made with the issuance of PD No.
1771 to improve and strength the financial system, among which was the
increase in the capitalization of the CBP from P10 million to P10
billion.

1986 - Executive Order No. 16 amended the Monetary Board membership to

promote greater harmony and coordination of the government monetary and
fiscal policies.

3 July 1993 - The Bangko Sentral ng Pilipinas (BSP) was established to

replace the CBP as the country’s central monetary authority.
❖ Discuss the primary objectives of the BSP.

➢ To maintain price stability conducive to a balanced and sustainable growth of

the economy.
➢ To promote and maintain monetary stability and convertibility of the peso

❖ Discuss the Characteristics of BSP.

➢ Profit motive is only secondary

➢ Operations are controlled by government laws; and
➢ Does not deal directly with the public.

❖ What are the responsibilities of BSP?

➢ Provides policy direction in the areas of:

■ Money
■ Banking
■ Credit
➢ Management of money supply
➢ Supervises the operations of banking institutions
➢ Exercises regulatory powers over finance companies and non-bank financial
institutions.

❖ What is PhilPass
➢ It is a real time gross settlement system (RTGS), an automated facility owned
and operated by BSP. It settles interbank fund transfers against the DDA of
the participant banks and financial institutions maintained by the BSP.