Central Banks and BSP
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Questions and Answers

What percentage of member states voted to leave the EU?

  • 60%
  • 51.9% (correct)
  • 48.1%
  • 70%

    • Why did the UK want to leave the EU according to the content?

  • EU has too many rules and regulations
  • EU allows too many immigrants
  • EU threats British Sovereignty
  • All of the above (correct)

    • What is the Banker of the Government designated as?

  • Bangko Sentral (correct)
  • International Monetary Fund
  • Central Bank of the Philippines
  • European Central Bank

    • What international organization is the Bangko Sentral represented in?

    <p>International Monetary Fund</p> Signup and view all the answers

    What is one of the reasons the UK wanted to leave the EU?

    <p>EU allows too many immigrants</p> Signup and view all the answers

    What chapter is related to the functions of the Bangko Sentral?

    <p>Chapter V – Functions as Banker and Financial Advisor</p> Signup and view all the answers

    What was drafted by Secretary of Finance Manuel Roxas in 1939?

    <p>A bill establishing a central bank</p> Signup and view all the answers

    What is the primary motive of the Bangko Sentral ng Pilipinas (BSP)?

    <p>Public service</p> Signup and view all the answers

    What is a key characteristic of the Bangko Sentral ng Pilipinas (BSP) as a central bank?

    <p>Operations controlled by government laws</p> Signup and view all the answers

    What is one of the key functions of the Bangko Sentral ng Pilipinas (BSP) as a bank of issue?

    <p>Issuing notes and coins</p> Signup and view all the answers

    What is the main reason for the Bangko Sentral ng Pilipinas (BSP) to issue notes and coins?

    <p>For uniformity and effect government supervision over the money supply</p> Signup and view all the answers

    What is the role of the Bangko Sentral ng Pilipinas (BSP) as the government's banker?

    <p>Managing the government's account transactions</p> Signup and view all the answers

    What is the Financial Supervision Sector (FSS) responsible for?

    <p>Regulation of banks and other BSP-supervised financial institutions</p> Signup and view all the answers

    What is the Monetary Economics Sector (MES) responsible for?

    <p>Monetary policy formulation</p> Signup and view all the answers

    What is the primary function of centralized reserves in mitigating bank runs?

    <p>To provide a source of liquidity for banks facing sudden withdrawal demands</p> Signup and view all the answers

    What is the role of centralized reserves during currency crises?

    <p>To defend against currency crises by providing the necessary resources to intervene in the foreign exchange market</p> Signup and view all the answers

    What is the role of centralized reserves during liquidity shortages?

    <p>To act as a backstop to ensure the smooth functioning of interbank lending and payment systems</p> Signup and view all the answers

    What is the role of the Bangko Sentral ng Pilipinas (BSP) in reserve management?

    <p>To manage foreign exchange reserves</p> Signup and view all the answers

    What is the purpose of maturity reserves?

    <p>To ensure that the bank can meet payout obligations when the fixed deposit term ends</p> Signup and view all the answers

    What is the purpose of capital reserves?

    <p>To cover potential losses</p> Signup and view all the answers

    What is the purpose of demand deposits?

    <p>Immediate reserves that ensure all withdrawals can be met instantly</p> Signup and view all the answers

    What is the purpose of compensating balances?

    <p>For minimum balance maintenance</p> Signup and view all the answers

    When was the Bank of Japan established?

    <p>June 1882</p> Signup and view all the answers

    What is one of the goals of monetary policy?

    <p>To promote price stability</p> Signup and view all the answers

    What happened in 1942?

    <p>The Bank of Japan Act of 1942 was promulgated</p> Signup and view all the answers

    What is a feature of monetary policy?

    <p>Regulation of Money Supply</p> Signup and view all the answers

    What happened in the 1980s in Japan?

    <p>The bubble economy era occurred</p> Signup and view all the answers

    What is another goal of monetary policy?

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

    What happened in 1897?

    <p>Japan adopted the gold standard</p> Signup and view all the answers

    When did business operation of the Bank of Japan begin?

    <p>October 10, 1882</p> Signup and view all the answers

    When was the Bank of Japan Act of 1997 promulgated?

    <p>June 1997</p> Signup and view all the answers

    What is the primary function of the Bank of Japan?

    <p>To maintain price stability</p> Signup and view all the answers

    What is the role of the Monetary Board?

    <p>To exercise the powers and functions of the BSP</p> Signup and view all the answers

    What is one of the key functions of the Bank of Japan?

    <p>To maintain financial system stability</p> Signup and view all the answers

    What is the role of the Bank of Japan in payment settlement systems?

    <p>To maintain the stability of payment systems</p> Signup and view all the answers

    What is the role of the Bank of Japan in market operations?

    <p>To control the money supply and interest rate</p> Signup and view all the answers

    What is one of the key functions of the Bank of Japan?

    <p>To provide financial services to the government</p> Signup and view all the answers

    Who is part of the Monetary Board?

    <p>The Governor of the BSP</p> Signup and view all the answers

    Study Notes

    Central Banks

    • 1939: A bill establishing a central bank was drafted by Secretary of Finance Manuel Roxas and approved by the Philippine Legislature.

    Characteristics of BSP as a Central Bank

    • Profit motive is only secondary
    • Operations are controlled by government laws
    • Does not deal directly with the public

    Functions of the BSP

    • It is a bank of issue, with the sole power to issue notes and coins for uniformity, government supervision over the money supply, and as a source of income
    • It is the government's banker, responsible for managing all account transactions of the government
    • It is an agent of the government, with fixed deposits, and responsible for liquidity reserves and capital reserves

    The New Organizational Structure of the BSP

    • Financial Supervision Sector (FSS) – responsible for the regulation of banks and other BSP-supervised financial institutions
    • Monetary Economics Sector (MES) – responsible for the regulation of banks and other BSP-supervised financial institutions

    Role of Centralized Reserves in Mitigating Risks

    • Bank Runs - Centralized reserves provide a source of liquidity for banks facing sudden withdrawal demands
    • Currency Crises - Centralized reserves help defend against currency crises by providing the central bank with the necessary resources to intervene in the foreign exchange market
    • Liquidity Shortages - Centralized reserves act as a backstop to ensure the smooth functioning of interbank lending and payment systems

    Role of BSP in Securing and Facilitating Reserves

    • Reserve Management - managing the Philippines' foreign exchange reserves, ensuring their safety and liquidity
    • Managing liquidity reserves, capital reserves, and fixed deposits

    Bank of Japan

    • Established in 1882, with the BOJ Act of 1882 promulgated
    • 1897: Japan adopts the gold standard to stabilize the yen
    • 1910s to 1942: World War Era
    • 1942: Bank of Japan Act of 1942 is promulgated, and the Bank was reorganized
    • Post-War, Economic Construction & Growth (1949 to 1950s)
    • Bubble Economy Era (1980s to 1990s)
    • Post-Bubble Era (1997 to 1998)

    Functions of the Bank of Japan

      1. Monetary Policy
      • To maintain price stability
      1. Currency Issuance
      • Issues Japanese yen
      1. Financial System Stability
      • Monitors and maintains stability of financial system
      1. Payment Settlement Systems
      1. Market Operations
      • Controls money supply & interest rate
      1. Financial Services for the Government
      1. International Finance
      1. Ensures Smooth Settlement of Funds

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    Learn about the history and characteristics of central banks, specifically the Bangko Sentral ng Pilipinas (BSP), and their key functions.

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