Professional Documents
Culture Documents
Monetary Policy
Monetary Policy
Monetary Policy
Source: www.bsp.gov.ph
Objective of the Monetary
Policy
Source: www.bsp.gov.ph
Settings of Monetary Policy
Expansionary Contractionary
Source: www.bsp.gov.ph
In cases of unemployment, recession, and
deflation -
Remedy is to increase money in circulation and inducing
spending.
Government actions:
• Reverse Repurchase Rate (RRR) - the policy rate at which the BSP
borrows from banks with government securities as collateral.
• Reserve Requirement – the proportion of banks’ deposits and deposit
substitute liabilities that banks are required to hold as reserves.
• Special Deposit Accounts (SDA) – fixed term deposits with the BSP by
banks and trust entities of BSP-supervised financial institutions .
• Rediscounting – a special refinancing facility of central banks wherein
a financial institution borrows money from the BSP using promissory
notes and other loan papers of its borrowers as collateral.
Source: www.bsp.gov.ph
Instruments under the IRC System
-
1. Open Market Operations (OMO)
• Reverse Repurchase/Repurchase transactions
• Outright purchases and sales of securities
• Foreign exchange swaps