BANKO SENTRAL NG

PILIPINAS
CENTRAL BANK
• A public institution that usually issues the
currency, regulates the money supply, and
control the interest rates in a country.
• Central institution designed to bring about
unified control of the financial system of the
country.
• Government institution which operates
primarily for service and not for profit.
Characteristics of a central bank
• Publicly-owned
• Bank of currency issue
• Bankers bank
• Custodian of countries reserves
• Regulator of monetary and financial activities
Objectives of the Bangko Sentral ng Pilipinas

• to maintain price stability conducive to a

balanced and sustainable growth of the
economy.
• promote and maintain monetary stability and
the convertibility of the peso.
Three Pillars of the BSP
• price stability
▫ entails keeping inflation low to promote economic
efficiency and improve the wellbeing of the well being
of the country’s people
• financial stability
▫ ensures banks’ compliance prudential rules and
regulations; and ensures that banks conduct business
in a safe and sound manner
• efficient payment and settlement system
▫ ensures people to make safe, timely and accurate
settlements of financial transactions
Functions of a BSP
1. Liquidity management
▫ The BSP formulates and implements monetary
policy aimed at influencing money supply consistent
with its primary objective to maintain price stability.
▫ Monetary policy
 Determines the “appropriate” levels for the money supply
and interest rates that accomplish the economic goals of
the country.
 Can be implemented very quickly to reinforce fiscal policy
or, when necessary, to offset the effects of fiscal policy
 Used for inflation targeting
Inflation targeting
1. Open market operation
2. Acceptance of fixed term deposit
3. Rediscounting facility
4. Reserve requirements
Functions of BSP con’t.
2. Currency issue
3. 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
4. Lender of last resort
5. Financial Supervision
6. Management of Foreign currency reserves
7. Determination of exchange rate policy.
8. Other activities
▫ The BSP functions as the banker, financial
advisor and official depository of the
Government, its political subdivisions and
instrumentalities and government-owned and
-controlled corporations.

Reference:
• http://www.bsp.gov.ph/