1/7/2023

Monetary Policy
and Central
Banking
John Eric C. Gomez, MBA

Money in the
nation’s
economy

1
 1/7/2023

Learning Objectives:
• Know the definition of money.
• Appreciate the evolution of money.
• Explain the functions of money.
• Know the characteristics or features of a good money.
• Assess the similarities and differences of different kinds of money.
• Define what managed currency means and know its importance.
• Know the different types of money used in the Philippines

Money
• Economic unit that functions as a generally recognized medium
of exchange for transactional purposes in an economy.
• Used to purchase goods and services necessary for survival as well as
to represent wealth and must be noted that it has taken many forms
over time.

2
 1/7/2023

Evolution of Money

Functions of Money
Medium of Exchange

• Widely accepted in return for goods

or services

Unit of Account

• Act as common denominator in

trade, used to interpret prices and
denominate the value of goods or
services.

Store of Value

• Retain and transfer purchasing

power in the future

3
 1/7/2023

Features or Characteristics of a Good Money

• Durability
• Portability
• Acceptability / Verifiable
• Uniformity
• Divisibility
• Scarcity

Different kinds of Money

• Market-determined Money
• Government-issued Currency and Fiat Money
• Money substitutes and Fiduciary Media
• Cryptocurrency

4
 1/7/2023

Managed Currency
• A managed currency is one where a nation's government or central
bank intervenes and influences its value or buying power on the
market, especially in foreign exchange markets.
• Currency depreciation – Happens when a country’s currency falls
in value relative to other currencies.
• Currency appreciation – Happens when a country’s currency rises
in value relative to other currencies.

The Philippine Peso

• The Philippine peso, abbreviated as PHP
in foreign exchange (forex) markets, is
the national currency of the Republic of
the Philippines. The peso is known as
the "piso" in the Filipino and Tagalog
languages.
• The Philippine peso is made up of
100 cents or "sentimos" and is often
represented with the symbol ₱.

10

5
 1/7/2023

History of Philippine Money

Cobs/Macuquinas Revolutiona
Barter ry
& Pesos Fuertes
System Banknotes

Filipinization of Guerilla Notes &

Republic coins and Philippine
Resistance
paper money Currency Peso
11

New Generation Currency Banknote Series

(2010 – Present)

12

6
 1/7/2023

New Generation Currency Coin Series

(2018 – Present)

13

BSP Coin Series (1995 – Present)

14

7
 1/7/2023

THE 1000-PISO POLYMER BANKNOTE

(2022 – present)

15

Demonetized Coins and Notes

• Demonetization is the process by which a central bank removes
the monetary value of a legal tender currency it issues.
• Demonetized currencies are no longer accepted as payment for
goods and services.
• The prevention of counterfeiting
• Benchmarking with other countries
• A change in the type or form of government
• A change in the type of currency as part of political or social reform
• Redefining the value of money in response to hyperinflation
• Shift to a single design series of currency in countries where more than one
series are in circulation

16

8
 1/7/2023

References:
• BSP Website
• Investopedia
• Dale Rusell (May 2022). The Origin and Evolution of Money.

18

Bangko Sentral
ng Pilipinas

19

9
 1/7/2023

Learning Objectives:
• Know the history of BSP and the current governor of BSP.
• Familiarize with the BSP Organizational chart.
• Define the Mission, Vision, and Core Values of BSP.
• Know the objectives and responsibilities of BSP.
• Have a clear picture of the mandates and functions of BSP to
the Philippines.

20

Bangko Sentral ng Pilipinas

■ It is the central bank of the
Philippines.
■ Established on July 3,
1993, pursuant to the
provision of Republic Act
7653 or the New Central
Bank Act of 1993 as
amended by Republic Act
11211 or The Central
Bank Act of 2019.
■ Current Governor:
Gov. Felipe M. Medalla
21

10
 1/7/2023

BSP Organizational Chart

22

Vision and Mission of BSP

BSP Vision
The BSP aims to be recognized globally as the monetary authority and
primary financial system supervisor that supports a strong economy
and promotes a high quality of life for all Filipinos.
BSP Mission
To promote and maintain price stability, a strong financial system, and
a safe and efficient payments and settlements system conducive to a
sustainable and inclusive growth of the economy

23

11
 1/7/2023

BSP Core Values

■ Excellence - Consistently doing our best to master our craft,
continually improving our competencies, and learning new
things in pursuit of the organizational goals, comparable to
the best practices of other central banks.
■ Patriotism - Selfless commitment to the service of the
Filipino people and the country.
■ Integrity - Performing mandate with sincerity, honesty, and
uprightness, worthy of respect and emulation from others.
■ Solidarity - Performing with team spirit; acting and thinking
as one in the pursuit of common goals and objectives.
■ Accountability - Taking full responsibility for one’s or
group’s actions

24

Primary Objective of BSP

The primary objective of the Bangko Sentral is to maintain price stability conducive
to a balanced and sustainable growth of the economy and employment.

25

12
 1/7/2023

Objectives of BSP
It shall also:
1. Promote and maintain monetary stability and the convertibility of the peso.
2. Promote financial stability and closely work with the National Government,
including, but not limited to, the Department of Finance, the Securities and
Exchange Commission, the Insurance Commission, and the Philippine Deposit
Insurance Corporation;
3. Oversee the payment and settlement systems in the Philippines, including critical
financial market infrastructures, in order to promote sound and prudent practices
consistent with the maintenance of financial stability; and
4. Promote broad and convenient access to high quality financial services and
consider the interest of the general public

26

Responsibilities of BSP

It shall the responsibility of the BSP:

1. To provide policy directions in the areas of money, banking, and credit;
2. To supervise the operations of the banks and to exercise such regulatory and
examination powers as provided under RA No. 11211 (The New Central
Bank Act, as amended) and other pertinent laws over the quasi-banking
operations of non-bank financial institutions; and
3. To exercise regulatory and examination powers over money service
businesses, credit granting businesses, and payment system operators.

27

13
 1/7/2023

BSP Examination
The term “examination” shall refer to an investigation of an institution under the
supervisory authority of the Bangko Sentral to determine whether the institution is
operating on a safe and sound basis, inquire into its solvency and liquidity, and
assess the effectiveness of its compliance function to ascertain that it is conducting
business in accordance with laws and regulations.
1. Regular Examination – shall be done once a year, with an interval of twelve
(12) months from the last date thereof
2. Special Examination - may be conducted earlier, or at a shorter interval, when
authorized by the Monetary Board (MB) by an affirmative vote of five (5)
members.

28

Mandates and Functions of BSP

■ Monetary Policy
■ Monetary Operations
■ Systemic Risk Management
■ Financial Supervision
■ Payments and Settlements System Oversight
■ Currency Management
■ Inclusive Finance
■ Loans and Credit Operations
■ International Reserves Management
■ International Operations
■ International Economic Cooperation
■ Economic Education

29

14