PHILIPPINE FINANCIAL

SYSTEM
 MONEY
It is anything authorized by law to be generally
accepted to as follows:
1. Medium of Exchange
2.Legal Tender
3. Measure of Value
4.Means of Payment
5. Standard of Value
 Functions of Money
1. Medium of Exchange
-used to purchase goods and services
2. Legal Tender
- used as the common denominator or basis for
comparison of goods and services
3. Store of Value
-to be used in the future
4. Means of Payment
-for future payment of debt or other obligation
5. Conveyance
- used to transfer ownership from seller to buyer
 History of Money
Money was derived from the Latin Word Moneta,
surname of the Roman goddess Juno. Moneta refers to
mint of a place for coining money. According to the
etymonline.com, It also comes from the old French
monoie and the Modern French monnaie, meaning
money, coin, currency or change. Relative to the
attribute of Juno Moneta as the guardian of the finances
of the Roman Empire, it could also have been from the
Latin monere, meaning advice or warn. In ancient Greece,
the word moneta meant advisor, one who warn, or
makes people remember.
 Barter
Was the system used by men to get the
goods they wanted in exchange of what
they had before money was developed.
It is the good and services for another
good or service.
 Coinage
Is the process of turning metals into coins
with a fixed weight.
The process done in a mint.
Coin is an ingot of metal, the weight and
fineness of which are certified by the
integrity of the design on its surface or by
the power of the issuing authority.
 Plastic Money
a)Credit Card- used like money, but with credit limits
and accompanying charges. Amounts charged to the
card are paid at a later date.
b)Debit card also used like money, but the amount
used is immediately deducted from the account of the
holder held with the bank issuing the card.
c)Prepaid Cash Card purchased from the stores of
financial institutions. It can be used like money , but
the card can only be used up to the amount paid upon
purchase.
 Paper money
Money consisting of government
notes and banknote.
Paper money is lighter than coins,
making it more portable.
 Classification of Money
1. Commodity Money
- When things are used to get what we want, be it goods or
services, the things we used to pay for such may be termed
commodity money.
- Commodity money has its own value other than using it as
money. Shells can be used as ornament; Cattle can be used for
farm help or can be raised to produced meat; and metals have
value or can be used as tools.
- Commodity, as such has its own intrinsic value, the value of
the commodity itself. A cow has value, and shells like cowries
have value. Therefore they are considered commodity money.
2. Currency( Bills and Coins)
- The government of any country issues currency that is legal
tender in the country. It is minted and printed by the central
bank of the country with different denominations.
3. Check
- Generally used by businesses and persons in conducting
business, as well as personal transactions.
- Parties of the check:
1. Maker- writer of the check
2. Drawee- the bank which is ordered to pay the payee
3. Payee whom the check is to be paid
TYPES OF CHECK
1.Personal check
-is issued by the person to be drawn against
their own current/checking account in the
bank.
2. Business Check
-a check issued by the
companies/businesses for business
transactions.
3. Cashiers check / Managers Check
- issued by the bank against its own account
ensuring availability of funds.
4.Certified Check
-it is issued by the bank certifying that the
account of the person issuing it has available
funds.
5. Bank Draft
-it an be sight or demand draft(to be paid upon
presentation) and time draft(to be paid at future
date.
 Other classification of Money
1. Fiat/ Fiduciary Money-
-issued by the government without any gold/
precious metal or dollar backup and in which face
value is higher than the material of which it is made
of; also called fiat because money is given value by a
government edict or decree as the medium of
exchange, which is lega tender
2. Representative Money
-issued by the government backed up either by
precious metal or dollar.
 FINANCIAL SYSTEM
Defines as or describe or collectively the financial
markets, the participants and the instrument and
securities that are traded in the said markets.
Is the system that covers financial transactions
and the exchange of money between investors,
lenders, and borrowers.
Refers to a system of borrowing and lending of
funds or the demand for and supply of funds of
all individuals, institution, companies and of the
government.
 ELEMENTS OF FINANCIAL SYSTEM
The financial system has five essential elements:
1. The ultimate lenders and borrowers
2. Financial intermediaries- are the bridge that enables the
meeting of investors or surplus units and borrowers or deficit
units.
3. Financial instruments (or asset) - is an asset belonging to a
person or company.
4. Creation of money- (bank deposits) by banks when they satisfy
the demand for new bank credit.
5. Financial markets- are institutions and system that facilitate
transactions in all types of financial claims. They are bridge
between those with excess funds and those who need funds.
 FUNCTIONS OF FINANCIAL SYSTEM
1.Channeling the funds from saving units to
deficit units.
2.Providing a medium of exchange.
3.Providing a mechanism for risk-sharing.
4.Providing a channel through which the
central bank can influence the economy in
general and the financial system in
particular.
PHILIPPINE FINANCIAL SYSTEM
 Bangko Sentral ng Pilipinas
According to Fajardo (1994), the concept of the central bank
as developed in 1993 by Miguel Cuaderno, the first governor
of the central bank of the Philippines (now Bangko Sentral
ng Pilipinas). For 10 years, he conducted a research on the
various central banks of many countries. In 1946,a formal
preparation for the establishment of the central bank began
upon the instruction of the then President Manuel Roxas.
Cuaderno was assigned the task of governor . As governor he
choose the charter of the central bank of Guatemala as a
model for the charter of the Central Bank of the Philippines
because of the similar economic and social conditions of
Guatemala ang the Philippines.
 Monetary Board

Governor

Supervision and Resource

Security plant
Monetary stability examination management
complex
sector sector
BANGKO SENTRAL NG PILIPINAS

Banking Institution
Non-Banking Institution
 Banking Institutions
(Private Banking Institution)
Commercial Thrift Banks Rural Banks
Banking Institution
Ordinary commercial Savings and
banks Mortgage Banks
Universal Banks Private Development
Banks
Savings and Loan
Association
 Government Banking Institution
Philippine Development Land Bank of Philippine
National Bank Bank of the the Amanah Bank
Philippines Philippines
NON-BANK FINANCIAL INSTITUTION
Private non-bank Institution Government non-bank financial
institution
Investment banks Government service insurance system
Finance companies Social security system
Securities Dealers/Brokers
Pawnshops
Lending investors
Fund managers
Trust companies/ Department
Insurance companies
Etc.