Monetary Policy and Central Banking Course

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Questions and Answers

What significant change occurred in the Philippine coinage system during the Revolutionary Period of 1898?

The Philippine Republic issued its own coins and paper currency backed by the country’s natural resources.

What features distinguished the Spanish dos mundos from other coins during their circulation?

The Spanish dos mundos featured twin crowned globes and a cross on one side, representing Spanish rule over the Old and New World.

Why were barrillas struck in the Philippines, and what was their value?

Barrillas were struck due to a shortage of fractional coins and were worth about one centavo.

What were the pesos fuertes, and why were they significant in Philippine monetary history?

<p>Pesos fuertes were the first paper money circulated in the Philippines, issued by El Banco Espanol Filipino de Isabel II.</p> Signup and view all the answers

Identify two types of currency issued by the Philippine Republic during the Revolutionary Period.

<p>The Philippine Republic issued two-centavo copper coins and one peso as well as five peso revolutionary notes.</p> Signup and view all the answers

What happened to the currency issued by the Philippine Republic after General Aguinaldo's surrender?

<p>The currencies were withdrawn from circulation and declared illegal.</p> Signup and view all the answers

Why is it significant for a nation to revise or redesign its coins and banknotes?

<p>Redesigning currency can enhance security features, reflect national identity, and adapt to changing economic conditions.</p> Signup and view all the answers

Explain the purpose of counterstamping coins from other Spanish colonies for circulation in the Philippines.

<p>Counterstamping legalized the circulation of foreign coins within the Philippine economy.</p> Signup and view all the answers

How did the design elements of the Mexican Pillar Dollar reflect its historical context?

<p>The Mexican Pillar Dollar featured two columns flanking the globes, symbolizing Spain's dominion over both the Old and New Worlds.</p> Signup and view all the answers

What role do the designs and features of a nation's currency play in international trade?

<p>The designs and features signify a nation's cultural identity and can promote trust in the currency for trade transactions.</p> Signup and view all the answers

How did the barter system lead to the adoption of cowry shells as a medium of exchange?

<p>Bartering was inefficient for larger transactions, leading communities to adopt cowry shells for their uniform value and portability.</p> Signup and view all the answers

What were Piloncitos and what role did they play in the evolution of coinage in the Philippines?

<p>Piloncitos were early forms of coinage made of gold, used as a medium of exchange that facilitated trade in ancient Filipino society.</p> Signup and view all the answers

What was the significance of the cobs or macuquinas during the Spanish era in the Philippines?

<p>Cobs, or macuquinas, were the earliest coins introduced by the Spanish, representing the start of a regulated currency system in the archipelago.</p> Signup and view all the answers

In what ways does the Central Bank of the Philippines influence the design of banknotes?

<p>The Central Bank oversees the security features and designs of banknotes to ensure they are difficult to counterfeit and reflect national heritage.</p> Signup and view all the answers

How did the introduction of English Series Banknotes impact the Philippine monetary system?

<p>The English Series Banknotes provided standardized paper currency that facilitated trade and transactions during the American colonial period.</p> Signup and view all the answers

What are Guerrilla Notes and their significance in Philippine history?

<p>Guerrilla Notes were emergency currency issued by local resistance groups during the Japanese occupation in World War II, reflecting the struggle for independence.</p> Signup and view all the answers

What were the main characteristics of the Japanese 'Mickey Mouse' money during World War II in the Philippines?

<p>The 'Mickey Mouse' money was issued in high denominations with no backup reserves, leading to severe inflation and loss of value.</p> Signup and view all the answers

How did Guerrilla Notes differ from the Japanese-issued war notes?

<p>Guerrilla Notes were low-denomination currencies issued by local governments to resist Japanese occupation, while war notes were high-denomination and lacked real backing.</p> Signup and view all the answers

What significant change occurred in the Philippine banking system in 1912?

<p>In 1912, El Banco Espanol Filipino was renamed to the Bank of the Philippine Islands, transitioning to English language for all notes and coins.</p> Signup and view all the answers

What was the purpose of the Coinage Act approved by the US Congress in 1903?

<p>The Coinage Act aimed to establish a modern monetary system for the Philippines, pegging the peso to the US dollar at a 2:1 ratio.</p> Signup and view all the answers

Describe the issuance of treasury certificates in the Philippines starting May 1918.

<p>Starting in May 1918, treasury certificates replaced silver certificates, and a one-peso note was introduced to the currency system.</p> Signup and view all the answers

How did the establishment of a gold standard affect the Philippine peso during the American period?

<p>The gold standard provided stability to the Philippine peso by connecting its value to gold and pegging it to the US dollar.</p> Signup and view all the answers

What impact did the currency system changes have on the financial situation of Filipinos during the Japanese occupation?

<p>The rampant inflation and introduction of worthless 'Mickey Mouse' bills caused tremendous financial distress, leading to daily hardships for Filipinos.</p> Signup and view all the answers

What does the evolution of Philippine money under the Republic symbolize?

<p>It symbolizes a nation in control of its destiny, reflecting independence and a move towards self-sovereignty.</p> Signup and view all the answers

Flashcards

Cowry shells

A specific medium of exchange (money) in pre-Hispanic Philippines.

Piloncitos

First local coins in the Philippines, shaped with a flat base and inscribed with "MA" or "M".

Barter System

Exchanging goods or services without using money.

Pre-Hispanic trade

Trade conducted before the Spanish arrival was done through bartering.

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Spanish Colonial Coins

The earliest coins introduced to the Philippines by the Spanish, originating from Mexican and other Spanish colonies.

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Macuquinas

Early Spanish colonial coins brought from Mexico, also known as 'cobs'.

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Barter

The exchange of goods or services without the use of money.

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Philippine Pre-Spanish Times

The time period before Spanish colonization of the Philippines.

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Spanish dos mundos

Silver coins circulated in the Philippines and globally from 1732-1772, representing Spanish control over the Old and New World.

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Barrilla

Early, crude bronze or copper coin in the Philippines, worth approximately one centavo.

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Two-centavo copper coins

Coins struck at the Malolos arsenal during the Philippine Revolution.

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Revolutionary Period coins

Philippine Republic coins and paper currency issued during 1898-1899, backed by resources and signed by key figures.

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Peso and five peso notes

Revolutionary paper money, circulated during the Philippine Revolution, printed as 'Republika Filipina'.

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El Banco Espanol Filipino de Isabel II

First Philippine bank, issued the country's first paper money (pesos fuertes).

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Philippine Republic of 1898

Philippine government under General Emilio Aguinaldo during the revolution.

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American Monetary System

A monetary system in the Philippines based on gold, with the Philippine peso pegged to the American dollar at a 2:1 ratio.

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Coinage Act of 1903

Legislation approved by the US Congress regarding Philippine coinage.

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Bank of the Philippine Islands (BPI)

The renamed bank established to use English for notes and coins (1912-1933).

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Treasury Certificates (1918)

Replaced silver certificates in the Philippine monetary system in May 1918.

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Japanese Occupation War Notes

High-denomination notes issued with no backing during WWII.

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Guerrilla Notes

Low-denomination notes issued by local resistance groups during the Japanese occupation.

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Philippine Republic Monetary Focus

The evolution of Philippine money under the Philippine Republic, reflecting control and destiny.

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Severe Inflation (WWII)

Extremely high inflation during Japanese occupation of the Philippines, affected prices.

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Study Notes

Monetary Policy and Central Banking

  • This course examines the economics of central banking and monetary policy.
  • It focuses on the central banks' role in financial markets globally.
  • The impact of monetary policy on the economy and businesses is explored.
  • The course is structured into three modules addressing the financial system, the Bangko Sentral ng Pilipinas, and the tools of monetary policy.
  • Module 1 covers the financial system, including a historical overview of Philippine money.
  • Module 2 examines the structure and organization of the Bangko Sentral ng Pilipinas and details how the money supply is determined and controlled.
  • Module 3 explains the tools of monetary policy used by the BSP to control the money supply and interest rates, and their impact on economic activity.
  • The course emphasizes the interplay between social, political, and cultural factors and the development of money in the Philippines.

Course Structure

  • The course is divided into 3 modules.
  • Module 1 includes an introduction to the overview of the financial system, and the history of Philippine money.
  • Module 2 covers the organization of the Bangko Sentral ng Pilipinas and details of the money supply process.
  • Module 3 explores the tools of monetary policy, including inflation targeting and other monetary operations across the years.

Intended Learning Outcomes

  • Discuss the financial system.
  • Acknowledge the relationship between social, political, and cultural influences, and the development of money.
  • Understand the structure and organization of the Bangko Sentral ng Pilipinas (BSP).
  • Discuss how the money supply is determined in the economy.
  • Examine tools of monetary policy used by the BSP to manage the money supply and interest rates.
  • Understand the impact of monetary policy on interest rates and economic activity.

Course Pack Structure

  • The course pack outlines the course content using a module map.
  • Each module consists of lessons organized for study.

Learning Outcomes

  • Students will analyze the financial health of key industries and the entire economy.
  • Students will evaluate the impact of monetary policy on businesses through industry scanning case analysis.

Analysis

  • The analysis section of the course discusses various factors influencing stock prices and their impact on business investment and consumer spending.
  • Key distinctions between financial markets and financial intermediaries are highlighted.

Abstraction

  • Funds flow in the financial system, either directly between lenders and borrowers or indirectly via financial intermediaries.
  • The financial system plays a critical role in economic efficiency by facilitating the transfer of funds from surplus to deficit participants.

The Philippine Financial Market

  • Asset exchange is handled in specialized financial markets.
  • The markets are categorized into money markets, capital markets, foreign exchange markets, and derivatives markets.

Application

  • Students are directed to research different types of banks and their functions.

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FM 313 Monetary Policy and Central Banking PDF

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