Banking and Finance Institutions Chapter 5: Role of Bangko Sentral ng Pilipinas PDF

FInancial Management a B ndn king a ce in a n F tituti In s Prepared by: Arly Patague FInancial Management Ch ap t er 5 : Ro le o f Ba n gk...

FInancial Management a B ndn king a ce in a n F tituti In s Prepared by: Arly Patague FInancial Management Ch ap t er 5 : Ro le o f Ba n gk o n t ra l n g Prepared by: Arly Patague Man date The primary objective of the Bangko Sentral is to maintain price stability conducive to a balanced and sustainable growth of the economy and employment. It shall also promote and maintain monetary stability and the convertibility of the peso. The Bangko Sentral shall promote fi nancial stability and closely work with the National Government, including, but not limited to, the Department of Finance, Securities and Exchange Commission, the Insurance Commission, and the Philippine Deposit Insurance Corporation. The Bangko Sentral shall oversee the payment and settlement systems in the Philippines, including critical fi nancial market infrastructures, in order to promote sound and prudent practices consistent with the maintenance of fi nancial stability. Visio n The BSP aims to be recognized globally as the monetary authority and primary fi nancial system supervisor that supports a strong economy and promotes a high quality of life for all Filipinos Missi on To promote and maintain price stability, a strong fi nancial system, and a safe and effi cient payments and settlements system conducive to a sustainable and inclusive growth of the economy. Core Values Excellence – Consistently doing our best to master our craft, continually improving our competencies, and learning new things in pursuit of the organizational goals, comparable to the best practices of other central banks Patriotism – Selfl ess commitment to the service of the Filipino people and the country Integrity – Performing mandate with sincerity, honesty, and uprightness, worthy of respect and emulation from others Solidarity – Performing with team spirit; acting and thinking as one in the pursuit of common goals and objectives Accountability – Taking full responsibility for one’s or group’s actions Respon sibilitie The BSP provides policy directions in the areas of money, banking and s credit. It supervises operations of banks and exercises regulatory powers over functions. non-bank fi nancial institutions with quasi-banking Under the New Central Bank Act, the BSP performs the following functions, all of which relate to its status as the Republic’s central monetary authority. Respon sibilitie Liquidity Management. The BSP formulates and implements monetary policy s aimed at infl uencing money supply consistent with its primary objective to maintain price stability. Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts. Lender of last resort. The BSP extends discounts, loans and advances to banking institutions for liquidity purposes. Financial Supervision. The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions. Respon sibilitie Management of foreign currency reserves. The BSP seeks to maintain s suffi cient international reserves to meet any foreseeable net demands for foreign currencies in order convertibility of the Philippine peso. to preserve the international stability and Determination of exchange rate policy. The BSP determines the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy such that the role of Bangko Sentral is principally to ensure orderly conditions in the market. Other activities. The BSP functions as the banker, fi nancial advisor and offi cial depository of the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations. Organizational Structure Organizational Structure Monetary Board In the exercise of its authority, the Monetary Board shall: 1. Issue rules and regulations it considers necessary for the eff ective discharge of the responsibilities and exercise of the powers vested upon the MB and the BSP. The rules and regulations issued shall be reported to the President and Congress within fi fteen (15) days from the date of the issuance; 2. Direct the management, operations, and administration of the BSP, reorganize the personnel, and issue such rules and regulations as it may be deem necessary or convenient for this purpose. The legal units of the BSP shall be under the exclusive supervision and control of the MB. 3. Establish a human resource management system which shall govern the selection, hiring, appointment, transfer, promotion, or dismissal of all personnel. Such system shall aim to establish professionalism and excellence of the BSP in accordance with sound principles of management. Monetary Board 4. Adopt an annual budget for such expenditures by the BSP as are in the interest of the eff ective administration and operations of the BSP in accordance with applicable laws and regulations; and 5. Identify its members and other offi cials of the BSP, including personnel of the departments performing supervision and examination functions against all costs and expenses reasonably incurred by such persons in connection with any civil or criminal action, suit or proceedings to which he may be, or is, made a party by reason of the performance of his functions or duties, unless he is fi nally adjudged in such action or proceeding to be liable for willful violation of this Act, performed in evident bad faith or with gross negligence. Manual Of Operations For Banks (Morb) It serves as the principal source of banking regulations issued by the Monetary Board of the Bangko Sentral. It also covers adoption of international standards and best practices, as well as amendments to existing policies. The MORB is designed to be an authoritative collection of regulations governing banks which are all under the supervision of the Bangko Sentral ng Piliipinas. It also serves as a useful reference for any individual, institution or agency with an active interest in the banking system. Powers of the Bangko Sentral EXAMINATION The term “examination” shall refer to an investigation of an institution under the supervisory authority of the Bangko Sentral to determine whether the institution is operating on a safe and sound basis, inquire into its solvency and liquidity, and assess the eff ectiveness of its compliance function to ascertain that it is conducting business in accordance with laws and regulations. Powers of the Bangko Sentral SUPERVISORY ENFORCEMENT POLICY (1) Achieving the desired change. Eff ect a change in the overall condition and governance of Bangko Sentral supervised FIs consistent with the expectations set under relevant laws and regulations; and (2) Mitigating risk. Mitigate risks to the FIs and other stakeholders in order to maintain the stability of the fi nancial system. Powers of the Bangko Sentral PROMPT CORRECTIVE ACTION FRAMEWORK A bank may be subject to PCA whenever a violation is committed or deemed to have engaged in unsafe and unsound activities that could adversely aff ect the interest of depositors and/or creditors. THANK YOU!