Bangko Sentral: Functions and Operations

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Questions and Answers

Which of the following is a key function of financial system supervision and regulation?

Facilitating the development and adoption of electronic payment systems
Producing reports, studies, and economic indicators
Supervising and regulating banks and other financial institutions (correct)
Issuing and managing the country's currency

What is the primary objective of payment and settlement systems?

To protect the interests of financial consumers
To develop contingency plans and frameworks for crisis management
To ensure the efficiency, security, and accessibility of payment systems (correct)
To produce reports, studies, and economic indicators

What is the main goal of financial consumer protection?

To develop and adopt electronic payment systems
To ensure transparency, fairness, and responsible practices by financial institutions (correct)
To engage in international collaborations and partnerships
To maintain the integrity and security of the currency

What is a key responsibility of financial inclusion?

Monitoring and assessing financial system risks (B) Signup and view all the answers

What is the primary function of research and statistics in the central bank?

To produce reports, studies, and economic indicators (A) Signup and view all the answers

What is the main objective of international engagements in the central bank?

To engage in international collaborations and partnerships to enhance knowledge and expertise (A) Signup and view all the answers

Which of the following is NOT a key function of the central bank?

Providing loans to individuals and businesses (B) Signup and view all the answers

What is a key aspect of financial system supervision and regulation?

Ensuring the safety, soundness, and compliance of banks and other financial institutions (B) Signup and view all the answers

What is the primary objective of the International Monetary Fund (IMF)?

To ensure the stability of the international monetary system (D) Signup and view all the answers

How many member states are there in the Association of South East Asian Nations (ASEAN)?

10 (C) Signup and view all the answers

What is the main function of the Macroeconomics Research Office (AMRO) in ASEAN+3?

To coordinate regional financial policies (A) Signup and view all the answers

What is the primary focus of the Asia-Pacific Economic Cooperation (APEC)?

To reduce barriers to trade and investment in the Asia-Pacific Region (B) Signup and view all the answers

What is the purpose of the Chiang Mai Initiative Multilateralisation (CMIM)?

To promote regional financial stability (B) Signup and view all the answers

What is the main activity of the Bank for International Settlements (BIS)?

To host policy dialogues and meetings on annual bases (B) Signup and view all the answers

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 (A) Signup and view all the answers

What is the main objective of the Association of South East Asian Nations (ASEAN)+3?

To provide guidance and directions for economic relations (D) Signup and view all the answers

What is the primary goal of the World Bank?

To reduce the share of the global population that lives in extreme poverty (C) Signup and view all the answers

When was the Intergovernmental Group of Twenty Four (G-24) formally created?

1972 (B) Signup and view all the answers

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 (D) Signup and view all the answers

How many member countries are part of the South East Asia, New Zealand, Australia (SEANZA) Initiative?

20 (C) Signup and view all the answers

What is the primary function of the International Relations Surveillance Department?

To conduct surveillance and capture emerging vulnerabilities (D) Signup and view all the answers

When was the Official Monetary and Financial Institutions Forum established?

2010 (B) Signup and view all the answers

What is the main objective of international economic cooperation?

To address potential problems and enhance global economic governance (C) Signup and view all the answers

What is the World Trade Organization responsible for?

Dealing with the rules of trade between nations (D) Signup and view all the answers

What is the primary tool of a central bank to increase money supply?

Lowering the reserve requirements (D) Signup and view all the answers

What happens when a central bank increases the discount rate?

It decreases the money supply (C) Signup and view all the answers

What is the main objective of monetary policy?

To manage inflation and promote economic stability (B) Signup and view all the answers

What is the effect of selling securities in the open market on the money supply?

It decreases the money supply (B) Signup and view all the answers

What is the role of the central bank in the financial system?

To manage the money supply, regulate the financial system, and issue currency (C) Signup and view all the answers

What is the effect of lowering the reserve requirements on the money supply?

It increases the money supply (C) Signup and view all the answers

What is the function of the central bank in terms of currency management?

To issue and manage currency (B) Signup and view all the answers

What is an additional function of the central bank apart from monetary policy?

All of the above (D) Signup and view all the answers

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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
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
Asia-Pacific Economic Cooperation (APEC)
- Established in 1989 to promote free trade and investment in the Asia-Pacific region

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