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Chapter 8 Brochure

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14 views3 pages

Chapter 8 Brochure

sadq

Uploaded by

mannuvfran01
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 8: THE FINANCIAL SYSTEM

Financial System – describes collectively the financial markets, the participants,


and the instruments, and securities that are traded in the said markets.
Functions of the Financial System
1. Channel the funds from the savings units (lenders) to the deficit units
(borrowers)
2. Provide a medium of exchange.
3. Provide a mechanism for risk sharing.
4. Provide a channel through which the Central Bank can influence the
economy in general, and the financial system in particular.
FINANCIAL SYSTEM PARTICIPANTS
1. Household or consumers – individuals and families receiving income in
terms of wages and salaries.
2. Financial institutions/intermediaries – firms that bridge the gap between
the surplus units/investors or savers and the deficit unit/borrowers.
3. Non-financial firms – business enterprises other than the financial firms;
includes trading, manufacturing, construction, etc.
4. The government – the national, provincial, municipal, city, and barangays.
5. The Central Bank – the Bangko Sentral ng Pilipinas for the Philippines.
6. Foreign Participants – foreign individuals, households, businesses, and
governments that participate in the financial market.
BANGKO SENTRAL NG PILIPINAS AND THE PHILIPPINE FINANCIAL SYSTEM
 1933 - Miguel Cuaderno, the first governor of the Central Bank of the
Philippines, developed the concept of a central bank.
 1946 – a formal preparation for the establishment of a central bank began
upon the instruction of the then President Manuel Roxas.
 The charter of the Central Bank of Guatemala was chosen as the model for
the charter of the Philippines.
The Bangko Sentral ng Pilipinas - is at the top of the financial system structure
of the Philippines.
The Monetary Board – exercises the powers and functions of the BSP.
- has 7 members & members serve a term of 6 years
- meets at least once a week
-Issues rules and regulations it considers necessary for the effective discharge of
the responsibilities and exercise of the powers vested in it.
Monetary Stability Sector – takes charge of the formulation and implementation
of the BSP’s 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


resources of the BSP.

Security Plant Complex – covers the line departments of: Mint and Refinery
Operations Department, Bank Note and Securities Printing Department, and
Department of General Services.

Objectives of BSP
1. Maintains monetary policies conducive to a balanced and sustainable
growth of the economy.
2. Maintains price stability in the country.
3. Promotes and maintains monetary stability and the convertibility of the
peso.
4. Maintains stability of the financial system
5. Supervises and regulates depository institutions.
Functions of BSP
1. Bank of Issue (BSP has the monopoly of printing money bills and minting
money coins)
2. Government’s banker, agent, and adviser.
3. Custodian of the cash reserves of banks.
4. Custodian of the nation’s reserves of international currency
5. Bank of rediscount and lender of last resort.
6. Bank of central clearance and settlement.
7. Controller of credit.
Monetary Policy and Financial System
Monetary Policy - refers to the manipulation of the money supply to affect the
economy of the country.
Increases in the money supply lower short-term interest rates, encouraging
investment and consumption.
Tools to Implement Monetary Policy
1. Open market operations (buying and selling government securities)
2. Reserve requirements on banks.
3. Discount Rate
4. Interest Rate
5. Credit Control
6. Money Supply

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