History of Money

Pre-Spanish Regime

• Between the 8th and 14th century, the penniform gold barter ring was being used in trading with
foreign merchants

• It was believed that the Piloncito , a crude rounded gold coin with flat sides and with a diameter of
about 3/8 of an inch circulated in the country during the Majapahit Empire. This was believed to have
been used for big transactions.

Spanish Regime

• Hilis kalamay was used after the arrival of the Spaniards in 1521. It bore the seals of the Spanish rulers
Charles II, Philip IV and Philip V.

• When the Spanish regime started in 1571, coins minted in Mexico called cabo de bara de plata where
the first coins that were widely circulated during and after the reign of King Philip II. • During the reign of
king Philip V (1700-1746), the first coin minted in the Philippines was called Spanish Barilla. The coat of
Manila was engraved on the center of the coin, The term barya was rooted from this coin. • From 1732-
1772, during the height of the galleon trade, the Spansih Dos Mundos was used. • In 1776, a second
coin was minted in the Philippines colderillas. It was about half of the size of the Spanish barilla and was
made of copper. It was issued to augment the shortage of the coins circulating due to the Spanish-
English War of 1762-1764. • The colderillas was easily replaced by the barillas bearing the bust of Carlos
III. This coin has the inscription Ciudad de Manila 1776 • In 1770, silver quartillos from the Spanish
Mexico was minted soley for Philippine circulation

• After the death of King Ferdinand VII, his daughter Queen Isabel II became the new monarch. During
her reign coins made of silver called Isabelinas were circulated. • In 1880, the value of silver peso was
higher than that of the American gold dollar. This explains why the Chinese traders did not want gold
coins but instead silver and reals. This made Filipinos export the gold coins in exchange for Mexican
silver. Their importation continued, which made the silver coins the sole currency in the Philippines. • In
1852, the first Filipino bank note was printed called pesos Fuertes issued by the El Banco-Espanol-
Filipino de Isabel II. • In 1855, the five pesetas made in Madrid or Paris was circulated.

• In 1887, the Isabel silver one real was issued and this time the word Manila was engraved on the face.
• In 1857, Queen Isabel II ordered the establishment of the Manila Mint, and started operation in March
18, 1861 • In 1877 a royal decree was promulgated to allow Manila Mint to coin silver coins of the same
fineness as the Spanish coins of .835 instead of the .900 • In 1880, gold coins minted bearing the bust of
king Alfonso XII. However, the people disliked these coins and melted them instead. The government
was forced to re-issue the Isabelinas bearing the year 1868.

• In 1887, the first Treasury Certificates were issued bearing the official seal of the Philippine
Government. It bore the signatures of Clem de Santiago, the Insular Treasurer. • In 1897, several coins
were received by the Philippines from the Spanish government in Madrid to alleviate a shortage of coins
because of the great increase in world trade which affected the country. Six million silver dollars marked
Filipinas were circulated. Inspite of this supply of coins remained limited because they were not freely
coined, and importation of money was restricted.

The First Philippine Republic to Post War Period

First Philippine Republic

• Gen. Emilio Aguinaldo’s administration issue paper money bearing the signature of Pedro A. Paterno,
the President of the Council of State at that time. • Considered as the Second Treasury Certificates that
were issued by the Philippines • In 1899, coins in two centimes denomination with the inscriptions
Republica Filipina and Libertad were circulated • The Island of Panay and the Province of Tarlac struck
their own coins • With the capture and surrender of Gen Aguinaldo, these currencies were withdrawn
from circulation and were declared illegal currency

American Regime

• American regime started August 28, 1898 but it was during the Treaty of Paris December 10, 1898 that
the sovereignty of the US over the Philippines was established • There were several currencies that were
allowed to circulate a. Mexican Silver Dollar or Peso Containing Eight Reals b. American Dollar- the
Americans would have wanted US Dollar to be the sole currency in the Philippines but many Filipinos
objected since they preferred the Mexican Silver since they are more accustomed to it. The Philippines
during that time was effectively under quasi-bimetallic standard since both gold and silver were used •
When the Third Treasury Certificates were issued, the US Dollar was withdrawn from circulation

• In 1901, Charles Connant, an American banking expert came to the country and recommended the
gold exchange standard. Americna Congress acted upon this recommendation and in March 2, 1903 the
Philippine Coinage Act was passed • The Gold Exchange Standard provided that the monetary unit of
value of the Philippines was a theoretical gold peso containing 12.9 grains of gold .9 fine. The American
dollar was containing 25.8 grains of .9 fine so that the value of the peso was exactly one-half of the
American dollar. • In order to maintain the parity of the silver peso with the theoretical gold peso, a fund
known as the Gold Standard Fund was established. The Philippine stood ready to sell drafts from the
fund to settle international obligations. The drafts were redeemable into American dollars which in turn
were convertible to gold coins.

• When the volume of trade increased due to an increased demand for Philippine product, the newly
created Philippine National Bank were allowed to issue Philippine Bank Notes to augment the
insufficient money supply. These notes were not legal tender, but it was payable to the bearer and the
bearer was promised the corresponding equivalent in treasury certificates, a silver peso or subsidiary
coins.

• Later the El Banco De Las Islas Filipinas known as the Bank of the Philippine Island was authorized to
issue its own bank notes. • In 1933 , the United States of America abandoned the gold standard when
the United States President Franklin Delano Roosevelt proclaimed the gold embargo in his territories and
colonies. The Philippines was affected and had to abandon the gold standard. Gold drafts could no
longer be redeemable to gold coins but could only be exchanged to US dollars. New types of coins
bearing the new coat of arms were circulated.

Japanese Regime

• When the Japanese forces occupied the Philippines, they issued a great quantity of paper bills called
the Japanese War Notes. These were popularly known as the “mickey mouse” money. These bills had
no reserves, neither was it backed up by any government asset. Peopl were forced to accept these bills
and since there was no control in its issuance it became inflationary. The Philippines then was under the
Involuntary Paper Standard.

New Republic

• In 1972 after the declaration of the Martial Law the Central Bank of the Philippines adopted the
Floating Rate where the peso was allowed to seek its own level in relation to foreign currencies
depending on the demand and supply of such foreign currency.