Bangko Sentral ng Pilipinas Overview
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Questions and Answers

What happens when the Central Bank 'loosens' the faucet to expand the money supply?

  • More savings occur
  • Interest rates increase
  • Less borrowing occurs
  • Less savings occur (correct)

    • Higher interest rates result in more spending in the economy.

    False

    What is the primary goal of monetary policy according to the content?

    Price stability

    When there is ‘too little money’ in the economy, the BSP may implement ________ policy.

    <p>expansionary</p> Signup and view all the answers

    Match the following monetary policy roles with their functions:

    <p>Monetary Authority = Managing monetary policy Regulator and Supervisor = Ensuring financial stability Lender of Last Resort = Providing support during financial distress Implementer of Monetary Policy = Executing monetary policy strategies</p> Signup and view all the answers

    Which act established the Central Bank of the Philippines?

    <p>The Central Bank Act</p> Signup and view all the answers

    The velocity of money refers to the rate at which money changes hands over a given period.

    <p>True</p> Signup and view all the answers

    The Central Bank controls ________ liquidity in the economy.

    <p>domestic</p> Signup and view all the answers

    What are the primary responsibilities of the Bangko Sentral ng Pilipinas (BSP)?

    <p>Control interest rates, inflation, and stabilize currency</p> Signup and view all the answers

    The new BSP logo features a square shape with green colors.

    <p>False</p> Signup and view all the answers

    What does the Philippine Eagle symbolize?

    <p>Strength, clear vision, and freedom</p> Signup and view all the answers

    The BSP is responsible for maintaining the stability of the Philippine _____ .

    <p>Peso</p> Signup and view all the answers

    Which of the following colors represents stability in the new BSP logo?

    <p>Blue</p> Signup and view all the answers

    Match the following colors from the BSP logo with their meanings:

    <p>Blue = Stability Gold = Wisdom, Wealth, Idealism White = Purity, Neutrality, Mental Clarity</p> Signup and view all the answers

    The primary objective of the BSP is to ensure that currency inflation is maintained at a manageable level.

    <p>True</p> Signup and view all the answers

    Name the three pillars of central banking represented by the three stars in the BSP logo.

    <p>Price stability, stable banking system, safe and reliable payments system</p> Signup and view all the answers

    What is the primary goal of the BSP's influence on the money supply and interest rates?

    <p>To ensure international monetary stability</p> Signup and view all the answers

    The BSP does not have any role in managing exchange rates.

    <p>False</p> Signup and view all the answers

    What does BSP stand for?

    <p>Bangko Sentral ng Pilipinas</p> Signup and view all the answers

    The BSP sets benchmark interest rates, including the overnight borrowing and __________ rates.

    <p>lending</p> Signup and view all the answers

    Which of the following is NOT a function of the BSP?

    <p>Trade Negotiation</p> Signup and view all the answers

    Match the following BSP functions with their descriptions:

    <p>Exchange Rate Management = Stabilizing currency value Inflation Control = Maintaining price stability Foreign Reserves = Safeguarding national currency Liquidity Management = Controlling money supply in the economy</p> Signup and view all the answers

    The Term Deposit Facility (TDF) is used to bolster long-term interest rates.

    <p>False</p> Signup and view all the answers

    What is one facility offered by the BSP to manage liquidity?

    <p>Term Deposit Facility or Reverse Repurchase Facility</p> Signup and view all the answers

    Which of the following is NOT mentioned as a counterfeiting prevention feature in currency design?

    <p>RFID chips</p> Signup and view all the answers

    The Term Lending Facility offers short-term loans to banks for specific purposes.

    <p>False</p> Signup and view all the answers

    What type of agreements does the BSP engage in to lend money to banks?

    <p>Repurchase Agreements</p> Signup and view all the answers

    The facility that encompasses printing operations for banknotes and minting operations for coins is known as __________.

    <p>Printing and Minting</p> Signup and view all the answers

    What is the main purpose of the Credit Risk Management facility?

    <p>To assess the creditworthiness of borrowing institutions</p> Signup and view all the answers

    Quality Control measures are only implemented after the currency has been printed.

    <p>False</p> Signup and view all the answers

    What does the Term Deposit Facility (TDF) allow banks to do?

    <p>Place deposits with the BSP for a specified term.</p> Signup and view all the answers

    Match these BSP facilities with their functions:

    <p>Term Lending Facility = Offers longer-term loans to banks Discount Window = Allows short-term borrowing at a specified discount Term Deposit Facility = Enables banks to place deposits for a specified term Financial Stability Support = Provides credit support during financial distress</p> Signup and view all the answers

    What is the purpose of the know-your-customer (KYC) procedures required by the BSP?

    <p>To prevent illegal activities such as money laundering</p> Signup and view all the answers

    BSP has the authority to revoke licenses of NBFIs for non-compliance.

    <p>True</p> Signup and view all the answers

    What does BSP stand for?

    <p>Bangko Sentral ng Pilipinas</p> Signup and view all the answers

    The BSP aims to promote ________ by encouraging NBFIs to provide accessible financial services.

    <p>financial inclusion</p> Signup and view all the answers

    Which of the following risks is NOT mentioned as being managed by the BSP for NBFIs?

    <p>Market risk</p> Signup and view all the answers

    Match the following roles of BSP with their corresponding purposes:

    <p>Preventing Financial Crime = Ensuring compliance with KYC procedures Encouraging Innovation = Providing services to underserved populations Mitigating Risk = Managing credit and operational risks Promoting Financial Inclusion = Increasing access to financial services</p> Signup and view all the answers

    The BSP assists NBFIs only in terms of economic growth with no focus on illegal activities.

    <p>False</p> Signup and view all the answers

    What is the role of the Anti-Money Laundering Council (AMLC) in relation to the BSP?

    <p>To report suspicious transactions involving NBFIs.</p> Signup and view all the answers

    Study Notes

    Bangko Sentral ng Pilipinas (BSP)

    • Established in 1949, the BSP is the central bank of the Philippines
    • Replaced the Central Bank of the Philippines, which was established in 1948
    • Holds the mandate to manage the country's monetary policy and ensure financial stability

    Evolution of the BSP's Monetary Policy Framework

    • Initially focused on supporting economic recovery efforts
    • Adopted a Monetary Policy Framework in 1995, shifting towards a greater emphasis on price stability
    • Implemented a Modified Monetary Targeting framework in 1972, emphasizing the importance of price stability

    BSP's Functions

    • Implements monetary policy to control inflation and stabilize the currency
    • Regulates and supervises the banking system, ensuring financial stability
    • Acts as the lender of last resort during financial distress
    • Manages the country's international reserves and exchange rate
    • Promotes financial inclusion by encouraging access to financial services for underserved populations

    The BSP's Role: Expanding the Money Supply

    • Loosens the money supply ("Opens the Faucet") during periods of low economic activity
    • Increases money supply to stimulate economic growth and counter deflationary pressures
    • Reduces the money supply ("Tightens the Faucet") during periods of high inflation
    • Decreases the money supply to manage inflation and prevent overheating of the economy

    BSP's Monetary Policy Tools

    • Sets Policy Interest Rates:
      • Influences overall borrowing costs within the economy
      • Includes the overnight repurchase (repo) and lending rates
    • Reserve Requirements:
      • Sets the percentage of deposits that banks must hold in reserve
      • Controls the amount of money banks can lend out
    • Liquidity Management Facilities:
      • Offers tools like the Term Deposit Facility (TDF) and the Reverse Repurchase (RRP) Facility
      • Manages short-term interest rates and liquidity in the banking system

    BSP's Currency Management

    • Security Features:
      • Implements advanced designs and security features to prevent counterfeiting
      • Uses holograms, watermarks, and specialized inks
    • Research & Development:
      • Improves and innovates currency design and production techniques
      • Adapts to emerging security challenges in the currency
    • Printing & Minting:
      • Oversees the production of banknotes and coins
    • Inventory Management:
      • Maintains an adequate supply of currency while preventing overproduction
    • Quality Control:
      • Ensures high production standards for all issued currency

    BSP's Supervision & Regulation of Non-Bank Financial Institutions (NBFIs)

    • Ensures Financial Stability: - Prevents systemic risks and financial crises
    • Protects Consumers: - Promotes transparency and fair treatment for borrowers and consumers of financial services
    • Prevents Financial Crime: - Implements Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) measures - Monitors institutions to prevent misuse for illegal activities
    • Encourages Innovation and Inclusion: - Promotes financial inclusion by encouraging NBFIs to make financial services accessible to underserved populations
    • Mitigates Risk: - Helps NBFIs manage risk effectively, including: - Credit risk - Liquidity risk - Operational risk
    • Upholds Legal & Regulatory Compliance: - Ensures NBFIs comply with relevant laws, rules, and regulations
    • Facilitates Efficient Financial Markets: - Creates an environment where financial markets function effectively

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    Related Documents

    Philippine Monetary Policy PDF

    Description

    This quiz covers the establishment and evolution of the Bangko Sentral ng Pilipinas (BSP) since 1949, focusing on its monetary policy and key functions. Understand how the BSP manages monetary policy and financial stability in the Philippines, and explore its regulatory roles within the banking system.

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