32 Questions
Which of the following is a key function of financial system supervision and regulation?
Supervising and regulating banks and other financial institutions
What is the primary objective of payment and settlement systems?
To ensure the efficiency, security, and accessibility of payment systems
What is the main goal of financial consumer protection?
To ensure transparency, fairness, and responsible practices by financial institutions
What is a key responsibility of financial inclusion?
Monitoring and assessing financial system risks
What is the primary function of research and statistics in the central bank?
To produce reports, studies, and economic indicators
What is the main objective of international engagements in the central bank?
To engage in international collaborations and partnerships to enhance knowledge and expertise
Which of the following is NOT a key function of the central bank?
Providing loans to individuals and businesses
What is a key aspect of financial system supervision and regulation?
Ensuring the safety, soundness, and compliance of banks and other financial institutions
What is the primary objective of the International Monetary Fund (IMF)?
To ensure the stability of the international monetary system
How many member states are there in the Association of South East Asian Nations (ASEAN)?
10
What is the main function of the Macroeconomics Research Office (AMRO) in ASEAN+3?
To coordinate regional financial policies
What is the primary focus of the Asia-Pacific Economic Cooperation (APEC)?
To reduce barriers to trade and investment in the Asia-Pacific Region
What is the purpose of the Chiang Mai Initiative Multilateralisation (CMIM)?
To promote regional financial stability
What is the main activity of the Bank for International Settlements (BIS)?
To host policy dialogues and meetings on annual bases
What is the purpose of the Executives Meeting of the East Asia-Pacific Central Banks (EMEAP)?
To provide a forum for central banks to discuss regional financial issues
What is the main objective of the Association of South East Asian Nations (ASEAN)+3?
To provide guidance and directions for economic relations
What is the primary goal of the World Bank?
To reduce the share of the global population that lives in extreme poverty
When was the Intergovernmental Group of Twenty Four (G-24) formally created?
1972
What is the main function of the South East Asian Central Banks (SEACEN) Research and Training Centre?
To serve as the regional learning hub for central banks in the Asia-Pacific region
How many member countries are part of the South East Asia, New Zealand, Australia (SEANZA) Initiative?
20
What is the primary function of the International Relations Surveillance Department?
To conduct surveillance and capture emerging vulnerabilities
When was the Official Monetary and Financial Institutions Forum established?
2010
What is the main objective of international economic cooperation?
To address potential problems and enhance global economic governance
What is the World Trade Organization responsible for?
Dealing with the rules of trade between nations
What is the primary tool of a central bank to increase money supply?
Lowering the reserve requirements
What happens when a central bank increases the discount rate?
It decreases the money supply
What is the main objective of monetary policy?
To manage inflation and promote economic stability
What is the effect of selling securities in the open market on the money supply?
It decreases the money supply
What is the role of the central bank in the financial system?
To manage the money supply, regulate the financial system, and issue currency
What is the effect of lowering the reserve requirements on the money supply?
It increases the money supply
What is the function of the central bank in terms of currency management?
To issue and manage currency
What is an additional function of the central bank apart from monetary policy?
All of the above
Study Notes
Monetary Policy & Central Banking
- Central banks have primary tools to manage money supply:
- Reserve requirements
- Discount rate
- Interest on reserves
- Open market operations
Reserve Requirements
- Refers to the amount of funds banks must keep in vaults or reserves that are not allowed to be lent
- Lowering reserve requirements increases money supply and lowers interest rates
- Increasing reserve requirements decreases money supply and increases interest rates
Discount Rate
- The interest rate charged by central banks to commercial banks and other financial institutions for short-term loans
- Increasing the discount rate increases borrowing costs, decreasing money supply
- Decreasing the discount rate reduces borrowing costs, increasing money supply
Interest on Reserves
- Refers to the additional amount of funds banks keep in excess of reserve requirements
- Interest rates on excess reserves can influence banks' lending decisions and money supply
Open Market Operations
- Central banks buy or sell securities to increase or decrease money supply
- Buying securities increases money supply, while selling securities decreases it
Functions of Central Banks
- Monetary Policy
- Financial System Supervision and Regulation
- Currency Issuance and Management
- Payment and Settlement Systems
- Financial Consumer Protection
- Financial Inclusion
- Research and Statistics
- International Engagements
International Engagements
- International Economic Cooperation
- Reasons for cooperation:
- Strengthen surveillance mechanisms
- Capture emerging vulnerabilities
- Address potential problems
International Organizations
- Intergovernmental Group of Twenty Four (G-24)
- Established in 1977 to achieve policy coherence and represent developing countries in global economic governance
- Official Monetary and Financial Institutions Forum (OMFIF)
- Established in 2010 as an independent think tank for central banking and economic policy
- South East Asian Central Banks (SEACEN) Research and Training Centre
- Established in 1982 to serve as a regional learning hub for central banks in the Asia-Pacific region
- World Bank
- Established in 1944 to reduce extreme poverty
- Philippines has been a member since 1945
- World Trade Organization (WTO)
- Established to promote free trade and cooperation among member countries
- South East Asia, New Zealand, Australia (SEANZA) Initiative
- Composed of 20 member countries to promote cooperation among central banks through training courses
- International Monetary Fund (IMF)
- Established in 1945 to ensure stability of the international monetary system
- Three key functions:
- Surveillance
- Lending
- Capacity Development
- Association of South East Asian Nations (ASEAN)
- Composed of 10 member states to promote economic growth, collaboration, and regional peace
- Three objectives:
- Financial Integration
- Financial Inclusion
- Financial Stability
- Association of South East Asian Nations +3 (ASEAN+3)
- Established in 1997 to provide guidance and directions for economic relations
- Association of South East Asian Nations +3 (ASEAN+3) Macroeconomics Research Office (AMRO)
- Three functions:
- Surveillance
- CMIM Support
- Technical Assistance
- Three functions:
- Executives Meeting of the East Asia - Pacific Central Banks (EMEAP)
- Composed of 11 member central banks to promote cooperation and financial stability
- Three levels of activities:
- Governors Meetings
- Deputies Meetings
- Financial Stability Committee
- Bank for International Settlements (BIS)
- Two main activities:
- Policy Dialogues
- Meetings on Annual Bases
- Two main activities:
- Asia-Pacific Economic Cooperation (APEC)
- Established in 1989 to promote free trade and investment in the Asia-Pacific region
This quiz covers the characteristics, functions, and operations of central banks, specifically the Bangko Sentral, including monetary policy, credit operations, and security plant complex management.
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