Philippine Financial System Overview
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Questions and Answers

When was the Central Bank of the Philippines inaugurated?

  • 1948
  • 1939
  • 1944
  • 1949 (correct)

    • Who disapproved the central bank law in 1939?

  • US President Roosevelt (correct)
  • BSP Governor
  • Miguel Cuaderno Sr.
  • President Roxas

    • What is the role of the Monetary Board?

  • To supervise banking operations
  • To manage international reserves
  • To maintain financial stability
  • To execute monetary policy (correct)

    • What is one of the key responsibilities of the Bangko Sentral ng Pilipinas (BSP)?

    <p>Price Stability</p> Signup and view all the answers

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

    <p>To promote sustainable and inclusive economic growth</p> Signup and view all the answers

    What is the focus of the Bangko Sentral ng Pilipinas (BSP) in terms of financial stability?

    <p>System Risk Management</p> Signup and view all the answers

    When was the Banking supervision transferred to the Bureau of Banking?

    <p>1929</p> Signup and view all the answers

    What was the purpose of Presidential Decree No. 72 in 1972?

    <p>To improve the banking system</p> Signup and view all the answers

    What is the primary role of financial institutions in the financial system?

    <p>To act as a mediator between investors and borrowers</p> Signup and view all the answers

    What is an example of a nonbanking institution?

    <p>AIA Philippines</p> Signup and view all the answers

    What is the main function of the Bangko Sentral ng Pilipinas (BSP)?

    <p>To regulate the operations of financial institutions and markets</p> Signup and view all the answers

    What is the term for the marketplace where buyers and sellers transact and trade with each other?

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

    What is the main difference between banking institutions and nonbanking institutions?

    <p>Banking institutions can accept deposits, while nonbanking institutions cannot</p> Signup and view all the answers

    What is the primary goal of financial institutions?

    <p>To maximize profits</p> Signup and view all the answers

    What is the term for the system that allows the exchange of funds between financial market participants?

    <p>Financial System</p> Signup and view all the answers

    What is an example of a financial service provided by financial institutions?

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

    What is the primary function of the BSP in relation to economic education?

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

    What is the primary market in finance?

    <p>A market where companies raise capital by issuing new securities</p> Signup and view all the answers

    What is the example of a company that is involved in the primary market transaction?

    <p>San Miguel Corporation</p> Signup and view all the answers

    What is the secondary market in finance?

    <p>A market where investors trade financial assets with each other</p> Signup and view all the answers

    What is the example of a company that is involved in the secondary market transaction?

    <p>COL Financial Group Inc.</p> Signup and view all the answers

    What is an example of a financial asset?

    <p>A stock issued by a company</p> Signup and view all the answers

    What is the example of a company that issues financial assets?

    <p>Ayala Corporation</p> Signup and view all the answers

    What is the role of the BSP in the financial system?

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

    What was the economic system used by the indigenous people of the Philippines before Spanish colonization?

    <p>Barter and trade</p> Signup and view all the answers

    What type of coins were introduced by the Spanish in the Philippines during the Spanish Colonial Era?

    <p>Real and cuarto coins</p> Signup and view all the answers

    When was the Bangko Sentral ng Pilipinas (BSP) established?

    <p>July 3, 1993</p> Signup and view all the answers

    What is the primary role of the Bangko Sentral ng Pilipinas (BSP) in the Philippine economy?

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

    What was the result of the Act No. 52 in 1900?

    <p>The placement of banks under the Bureau of Treasury</p> Signup and view all the answers

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

    <p>To be recognized globally as the monetary authority and primary financial system supervisor</p> Signup and view all the answers

    What was the era when the Philippine Commission created the Philippine Currency Act?

    <p>American Period</p> Signup and view all the answers

    When was the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas) inaugurated and formally opened?

    <p>1949</p> Signup and view all the answers

    What is the main purpose of the capital market?

    <p>To facilitate long-term investments</p> Signup and view all the answers

    Which company is an example of a financial services provider?

    <p>Bank of the Philippine Islands (BPI)</p> Signup and view all the answers

    What is the main function of the money market?

    <p>To manage cash flows and provide short-term debt</p> Signup and view all the answers

    Which of the following is NOT a component of the financial system?

    <p>Insurance company</p> Signup and view all the answers

    What is the primary objective of the financial system?

    <p>To help individuals and organizations to get the funds they need</p> Signup and view all the answers

    Which of the following is an example of a company that trades short-term debt?

    <p>Philippine Dealing &amp; Exchange Corp. (PDEx)</p> Signup and view all the answers

    What is the main difference between the capital market and the money market?

    <p>The capital market trades long-term debt, while the money market trades short-term debt</p> Signup and view all the answers

    Which of the following is a component of the financial system?

    <p>All of the above</p> Signup and view all the answers

    Study Notes

    Overview of the Philippine Financial System

    • The Philippine financial system has a rich history, dating back to the pre-colonial period when indigenous people had their own economic systems based on barter and trade.
    • The Spanish introduced a monetary system in the Philippines using silver coins called "reales" and copper coins known as "cuartos" during the Spanish colonial era (1521-1898).
    • The American period (1898-1946) saw the introduction of the Philippine peso through the Philippine Currency Act.
    • The Central Bank of the Philippines (now Bangko Sentral ng Pilipinas) was inaugurated and formally opened in 1949.

    Bangko Sentral ng Pilipinas (BSP)

    • The BSP is the central bank of the Republic of the Philippines, established on July 3, 1993, under the 1987 Philippine Constitution and the New Central Bank Act of 1993.
    • The BSP has fiscal and administrative autonomy and is committed to promoting and maintaining price stability, with a financial system that is safe, effective, and efficient.
    • The BSP's mission is to be recognized globally as the monetary authority and primary financial system supervisor that supports a strong economy and promotes a high quality of life for all Filipinos.

    Monetary Board Composition

    • The Monetary Board is composed of a chairman (BSP Governor), five full-time members from the private sector, and one member from the Cabinet.

    Roles, Functions, and Responsibilities of BSP

    • Price stability
      • Monetary policy
      • Monetary operations
    • Financial stability
      • System risk management
      • Financial supervision
    • Payments and settlements
    • Currency management
    • Inclusive finance
    • Loans and credit operations
    • International reserves management
    • International operations
    • International economic cooperation
    • Economic education

    Financial System Components

    • Financial markets
      • Primary market: where financial assets are initially sold (e.g., IPO)
      • Secondary market: where investors buy and sell financial assets to other investors (e.g., stock market)
    • Financial assets
      • Examples: stocks, bonds, mutual funds
      • Example company: Ayala Corporation
    • Financial institutions
      • Banking institutions (e.g., BDO, Land Bank of the Philippines)
      • Non-banking institutions (e.g., AIA Philippines Life and General Insurance Company Inc.)
    • Financial services
      • Examples: investment, financial consulting, insurance, money transfer
      • Helps individuals get the fund they need and assures their money is properly safekept and efficiently invested.

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    Description

    Learn about the history and structure of the Philippine financial system, including the Bangko Sentral ng Pilipinas and its role as the central bank of the Republic of the Philippines.

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