MONETARY POLICY &

CENTRAL BANKING
Maria Jorgeth O. Carbon
 ESSENCE OF
MONEY
Types and
characteristics

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 WHAT IS
MONEY FOR
YOU?

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 TO FACILITATE THE EXCHANGE OF
GOODS AND SERVICES, TO LESSEN THE
TIME AND EFFORT REQUIRED TO CARRY
ON TRADE

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 TO ENABLE TRADE TO BE CARRIED ON AS
CHEAPLY AS POSSIBLE IN ORDER TO
MAKE FEASIBLE THE OPTIMUM DEGREE
OF SPECIALIZATION

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 TRADITIONAL
CHARACTERISTICS OF
MONEY

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 1. UTILITY
2.GENERAL ACCEPTABILITY
3. PORTABILITY
4. UNIFORMITY
5. MALLEABILITY
6. DURABILITY

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 .

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 MONETARY POLICY

the process by which the monetary authority of a country,

typically the central bank or currency board, controls either
the cost of very short-term borrowing or the money supply,
often targeting inflation or the interest rate to ensure price
stability and general trust in the currency

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 MONETARY POLICY GOALS

to promote a low and stable inflation conducive to a

balanced and sustainable economic growth (RA 7653).
The adoption of inflation targeting framework for monetary
policy in January 2002 is aimed at achieving this objective.

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 INFLATION TARGETING

focused mainly on achieving a low and stable inflation,

supportive of the economy’s growth objective. This
approach entails the announcement of an explicit inflation
target that the BSP promises to achieve over a given time
period.

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 With a pair, identify if the following is a EXPANSIONARY OR CONTRACTIONARY

MEASURE WHEN BANGKO SENTRAL :

1.Purchase securities in the open market

2. Lower the government discount rate.

3. Lower reserve requirement on banks.

4. Sell securities in the open market

5. Raise the discount rate

6 . Raise the reserve requirements

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 HOW TO ACHIEVE INFLATION
TARGET?

the BSP uses a suite of monetary policy instruments in

implementing the desired monetary policy stance. The
reverse repurchase (RRP) or borrowing rate is the primary
monetary policy instrument of the BSP.

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 OTHER MONETARY POLICY
INSTRUMENTS

• encouraging/discouraging deposits under the term deposit

auction facility (TDF);

• standing liquidity facilities, namely, the overnight lending facility

(OLF) and the overnight deposit facility (ODF);

• increasing/decreasing the reserve requirement;

• adjusting the rediscount rate on loans extended to banking

institutions on a short-term basis against eligible collateral of
banks' borrowers;

• outright sales/purchases of the BSP's holding of government

securities

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 MONETARY POLICY

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 .

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 THANK YOU
S U BT I T L E G O E S H E R E

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