Hon. Miguel Cuaderno, Sr. as the first governor.

Chronology of Events: Central Banking in the Philippines

1900 Act No. 52 was passed by the First Philippine Commission placing all banks under the Bureau of Treasury. The Insular Treasurer was authorized to supervise and examine banks and banking activities. The Bureau of Banking under the Department of Finance took over the task of banking supervision. A bill establishing a central bank was drafted by Secretary of Finance Manuel Roxas and approved by the Philippine Legislature. However, the bill was returned by the US government, without action, to the Commonwealth Government. A joint Philippine-American Finance Commission was created to study the Philippine currency and banking system. The Commission recommended the reform of the monetary system, the formation of a central bank and the regulation of money and credit. The charter of the Central Bank of Guatemala was chosen as the model of the proposed central bank charter. August 1947 A Central Bank Council was formed to review the Commissions report and prepare the necessary legislation for implementation. November 1972

The broad policy objectives contained in RA No. 265 guided the CBP in the implementation of its duties and responsibilities, particularly in relation to the promotion of economic development in addition to the maintenance of internal and external monetary stability. RA No. 265 was amended by Presidential Decree No. 72 to make the CBP more responsive to changing economic conditions. PD No. 72 emphasized the maintenance of domestic and international monetary stability as the primary objective of the CBP. Moreover, the CBPs authority was expanded to include not only the supervision of the banking system but also the regulation of the entire financial system. January 1981 Further amendments were made with the issuance of PD No. 1771 to improve and strengthen the financial system, among which was the increase in the capitalization of the CBP from P10 million to P10 billion. Executive Order No. 16 amended the Monetary Board membership to promote greater harmony and coordination of government monetary and fiscal policies. The Bangko Sentral ng Pilipinas (BSP) was established to replace the CBP as the countrys central monetary authority.

February 1929

1939

1946

1986

3 July 1993

Overview of the BSP

February 1948 President Manuel Roxas submitted to Congress a bill Establishing the Central Bank of the Philippines, defining its powers in the administration of the monetary and banking system, amending pertinent provisions of the Administrative Code with respect to the currency and the Bureau of Banking, and for other purposes. The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. It was established on 3 July 1993 pursuant to the provisions of the 1987 Philippine Constitution and the New Central Bank Act of 1993. The BSP took over from the Central Bank of Philippines, which was established on 3 January 1949, as the country s central monetary authority. The BSP enjoys fiscal and administrative autonomy from the National Government in the pursuit of its mandated responsibilities.

The bill was signed into law as Republic Act 15 June 1948 No. 265 (The Central Bank Act) by President Elpidio Quirino. 3 January 1949 The Central Bank of the Philippines (CBP) was inaugurated and formally opened with

Overview of Functions and Operations

Objectives

The BSPs primary objective is to maintain price stability conducive to a balanced and sustainable economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency.

government-owned and -controlled corporations.

Responsibilities
The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over nonbank financial institutions with quasi-banking functions. Under the New Central Bank Act, the BSP performs the following functions, all of which relate to its status as the Republics central monetary authority. y Liquidity Management. The BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability. Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts. Lender of last resort. The BSP extends discounts, loans and advances to banking institutions for liquidity purposes. Financial Supervision. The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasibanking functions. Management of foreign currency reserves. The BSP seeks to maintain sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso. Determination of exchange rate policy. The BSP determines the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy such that the role of Bangko Sentral is principally to ensure orderly conditions in the market. Other activities. The BSP functions as the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and

Governance of the Bank

The Monetary Board exercises the powers and functions of the BSP, such as the conduct of monetary policy and supervision of the financial system. Its chairman is the BSP Governor, with five full-time members from the private sector and one member from the Cabinet. The Governor is the chief executive officer of the BSP and is required to direct and supervise the operations and internal administration of the BSP. A deputy governor heads each of the BSP's operating sector as follows:

Monetary Stability Sector takes charge of the formulation and implementation of the BSPs monetary policy, including serving the banking needs of all banks through accepting deposits, servicing withdrawals and extending credit through the rediscounting facility. Supervision and Examination Sector enforces and monitors compliance to banking laws to promote a sound and healthy banking system. Resource Management Sector serves the human, financial and physical resource needs of the BSP