1 Name: Kevyn Lovelei Dawn O. Ogena Subject: FM131: Monetary Policy and Central Banking Date: July 15, 2014 SUMMARY OF THE BANGKO SENTRAL NG PILIPINAS Outline: I. Introduction II.History III.Vision and Mission IV. BSP Charter V. BSP Citizen’s Charter VI. Overview of Functions and Operations VII. Organization of the Bank VIII. Governance of the Bank IX. Audited Financial Statements X. Advocacies XI. Facilities SUMMARY History During 1900’s, an act passed by the First Philippine Commission placing all banks under Bureau of Treasury. However, the central monetary authority of the country hasn’t established until January 1949. The Central Bank of the Philippines (CBP) was formally inaugurated with Hon. Miguel S. Cuaderno as its first governor. The CBP’s duties and responsibilities were particularly focused on the promotion of economic development and the maintenance of internal and external monetary stability. After 44 years, on July 3, 1993, CBP was then changed to Bangko Sentral ng Pilipinas (BSP). BSP was established pursuant to the Republic Act 7653 or New Central Bank Act that was signed by then President Fidel V. Ramos. Vision and Mission To simply put it, the vision of BSP is to give a better standard of living for Filipinos. BSP’s mission, on the other hand, is focused to maintaining price stability and in leading the country’s economy to a stable and sustainable growth. They hope to create and implement sound and effective monetary policies that will help in realizing its vision. BSP Charter BSP governs the creation, responsibilities and rules and regulations of the BSP. It includes seven (7) chapters. These are: Establishment And Organizations of the Bangko Sentral ng Pilipinas, The Bangko Sentral and the Means of Payment, Guiding Principles of Monetary Administration by the Bangko Sentral, Instruments of Bangko Sentral Action, Functions as Banker and Financial Advisor of the Government, Privileges and Prohibitions and Transitory Provisions. These documents are strictly followed since the BSP have a big role in the country’s economy. BSP Citizen’s Charter A citizen’s charter is a government document setting out standards of service for public and private sector bodies. The BSP citizen’s charter includes: their pledge, their rules 2 on monetary stability, regional monetary affairs, supervision and examination, executive management services, resource management and security plant complex. It contains eight (8) chapters. These chapters govern how the operations and services of BSP go. Overview of Functions and Operations The BSP has the authority over banks and regulates non-bank financial institutions. Its primary objective was maintaining price stability. It also aims to promote and preserve the convertibility of the national currency. Its functions includes liquidity management, currency issue, lender of last resort, financial supervision, management of foreign currency reserves determination of foreign exchange rate policy and other activities (e.g. banker, financial advisor and official depository of the government). All of which, is stated under New Central Bank Act and is dedicated to its primary objectives. The BSP structure has a huge similarity with the Federal Reserve Bank of the United States since its structure was based on that of the US. Though, FRBS’ structure was much more complicated than BSP’s system. Organization of the Bank The simplest organizational structure of BSP places the monetary Board at the top as the ones who lead the operations of the institution with the BSP governor as its chairperson. It has six members. One of the members is a representative of the government and the rest are from private sector. The monetary board serves terms six years and may only be removed for cause. The same is followed with the governor. The board meets at least once a week. The BSP is divided to four sectors, which are the Monetary Stability Sector, Supervision and Examination Sector, Resource Management Sector and lastly, the Security Plant Complex. It also has an executive management that is divided to different offices and departments. Governance of the Bank Currently, the BSP Governor is Mr. Amando M. Tatangco, Jr. The monetary board that has 6 members: Sec. of Finance Cesar V. Purisima, Alfredo C. Antonio, Ignacio R. Bunye, Peter B. Favila, Felipe M. Medalla and Armando L. Suratos. The Monetary Stability sector is responsible for the creation and implementation of the monetary policies. Supervision and Examination is responsible for enforces and monitors compliance to banking laws of the banks and nonbank institutions. The Resource Management sector is the one who serves as the human, financial and physical resource needs of the BSP. Lastly, the Security Plant Complex (SCP) is the sector who is responsible for printing minting, refining, issuance, distribution and durability of coins, banknotes, gold bars, stocks and bonds, checks and other security printing or minting jobs of the Philippine government. Audited Financial Statements The BSP audited financial statements includes audit certification, balance sheet, income statement, statement of changes in equity, statement of comprehensive income, cash flow statement and notes to financial statement. The balance sheet shows that its assets and liabilities and capital have increased by Php 188,469,480,000. Although, looking at its income statement, their loss for the year has increased by Php 61,692,156,000. The statement of changes in equity, after summing up the capital, capital reserves, surplus and accumulated other comprehensive losses, is totalled to Php 64,515,750,000. The cash flow statement shows that the Cash and cash equivalents of the year as of 2012 has decreased to (Php 130,590,344,000) compared to 2011 that has Php 216,559,101,000. The clarifications of the accounts in the financial statements can be found in the notes to financial statements. 3 Advocacies The BSP has been involved in many activities that will help in realizing its vision to give the Filipino people a more comfortable life. It has been involved in developing a sustainable microfinance in the country as its answer to alleviate poverty. It has also worked for passing Anti-Money Laundering Act for legislation. It has also made the public more aware of its role in the economy and financial system and their financial literacy so that the transparency of monetary policy is enhanced. The BSP had also taken initiative to improve the remittance channels and environment so that it may be used to activities that are more productive. Facilities There are other facilities the BSP is using for their operations and other activities. The first facility is the Money Museum or more popularly known as the Museo ng Bangko Sentral ng Pilipinas that was launch on January 3, 1999. It displays their currency collection. Next is the Economic and Learning Center. This was one of their initiatives for one of their advocacies that is public information regarding economic and financial matters. Lastly is the Metropolitan Museum. This museum displays artifacts and other historical items from the different periods of Philippine History. Things such as sculptures, ritual pieces, ritual articles, and burial vessels can be found here.
