Creating a Central Bank for the Philippines
Chronology of Events: Central Banking in
the Philippines
1900 Act No. 52 was passed by the First Philippine Commission placing all
banks under the Bureau of Treasury. The Insular Treasurer was
authorized to supervise and examine banks and banking activities.
February 1929 The Bureau of Banking under the Department of Finance took over the
task of banking supervision.
1939 A bill establishing a central bank was drafted by Secretary of Finance
Manuel Roxas and approved by the Philippine Legislature. However, the
bill was returned by the US government, without action, to the
Commonwealth Government.
1946 A joint Philippine-American Finance Commission was created to study
the Philippine currency and banking system. The Commission
recommended the reform of the monetary system, the formation of a
central bank and the regulation of money and credit.
The charter of the Central Bank of Guatemala was chosen as the model
of the proposed central bank charter.
August 1947 A Central Bank Council was formed to review the Commission’s report
and prepare the necessary legislation for implementation.
February 1948
President Manuel Roxas submitted to Congress a bill “Establishing the
Central Bank of the Philippines, defining its powers in the administration
of the monetary and banking system, amending pertinent provisions of
the Administrative Code with respect to the currency and the Bureau of
Banking, and for other purposes.
15 June 1948
The bill was signed into law as Republic Act No. 265 (The Central Bank
Act) by President Elpidio Quirino.
3 January 1949 The Central Bank of the Philippines (CBP) was inaugurated and formally
opened with Hon. Miguel Cuaderno, Sr. as the first governor.
The broad policy objectives contained in RA No. 265 guided the CBP in
the implementation of its duties and responsibilities, particularly in
relation to the promotion of economic development in addition to the
maintenance of internal and external monetary stability.
November 1972 RA No. 265 was amended by Presidential Decree No. 72 to make the
CBP more responsive to changing economic conditions.
PD No. 72 emphasized the maintenance of domestic and international
monetary stability as the primary objective of the CBP. Moreover, the
CBP’s authority was expanded to include not only the supervision of the
banking system but also the regulation of the entire financial system.
January 1981 Further amendments were made with the issuance of PD No. 1771 to
improve and strengthen the financial system, among which was the
increase in the capitalization of the CBP from P10 million to P10 billion.
1986
Executive Order No. 16 amended the Monetary Board membership to
promote greater harmony and coordination of government monetary and
fiscal policies.
3 July 1993 The Bangko Sentral ng Pilipinas (BSP) was established to replace the
CBP as the country’s central monetary authority.
The BSP Vision and Mission
Vision
The BSP aims to be a world-class monetary authority and a catalyst for a globally competitive
economy and financial system that delivers a high quality of life for all Filipinos.
Mission
BSP is committed to promote and maintain price stability and provide proactive leadership in
bringing about a strong financial system conducive to a balanced and sustainable growth of the
economy. Towards this end, it shall conduct sound monetary policy and effective supervision
over financial institutions under its jurisdiction.
Overview of Functions and Operations
Objectives
The BSP’s primary objective is to maintain price stability conducive to a balanced and sustainable economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency.
Responsibilities
The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions.
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.
Liquidity Management. The BSP formulates and implements monetary policy aimed at influencing 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.
Management of foreign currency reserves. The BSP seeks to maintain sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso.
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, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations.
The BSP's Organizational Structure as of June 2009
Executive Management Services
Functional Sectors
o Monetary Stability Sector
o Supervision and Examination Sector
o Resource Management Sector
Security Plant Complex
The Monetary Board
The powers and function of Bangko Sentral are exercised by its Monetary Board, which has seven members appointed by the President of The Philippines. Under the New Central Bank Act, one of the government
sector members of the Monetary Board must also be a member of the Cabinet designated by the President.
The New Central Bank Act establishes certain qualifications for the members of the Monetary Board and also prohibits members from holding certain positions with other governmental agencies and private institutions that may give rise to conflicts of interest. With the exception of the members of the Cabinet, the Governor and the other members of the Monetary Board serve terms of six years and may only be removed for cause.
The Monetary Board meets at least once a week. The Board may be called to a meeting by the Governor of the Bangko Sentral or by two (2) other members of the Board. Usually, the Board meets every Thursday but on some occasions, it convenes to discuss urgent issues.
The major functions of the Monetary Board include the power to:
1. Issue rules and regulations it considers necessary for the effective discharge of the responsibilities and exercise of the powers vested in it;
2. Direct the management, operations, and administration of Bangko Sentral, organize its personnel and issue such rules
and regulations as it may deem necessary or desirable for this purpose;
3. Establish a human resource management system which governs the selection, hiring, appointment, transfer, promotion, or dismissal of all personnel;
4. Adopt an annual budget for and authorize such expenditures by Bangko Sentral as are in the interest of the effective administration and operations of Bangko Sentral in accordance with applicable laws and regulations; and
5. Indemnify its members and other officials of Bangko Sentral, 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 proceeding, to which any of them may be made a party by reason of the performance of his functions or duties, unless such members or other officials is found to be liable for negligence or misconduct.
The BSP Monetary Board
Chairman Amando M. Tetangco, Jr.
Members Cesar V. Purisima Juanita D. Amatong Nelly Favis-Villafuerte Alfredo C. Antonio Ignacio R. Bunye Peter B. Favila
The Governor
The Governor is the chief executive officer of BSP and is required to direct and supervise the operations and internal administration of BSP. Specifically, the Governor:
prepares the agenda for the meetings of the Monetary Board and submits policy recommendations for consideration of the Board;
executes and administers policies and measures approved by the Monetary Board;
appoints and fixes the remunerations and other emoluments of personnel, as well as imposes disciplinary measures upon personnel of the Bangko Sentral;
renders opinions, decisions, or rulings, which shall be final and executory until reversed or modified by the Monetary Board,
on matters regarding application or enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board, and the implementation thereof; and
exercises such other powers as may be vested in him by the Monetary Board.
The Governor is the principal representative of the Monetary Board and of the BSP. As such, the Governor is empowered to:
represent the Monetary Board and the BSP in all dealings with other offices, agencies and
instrumentalities of the Government and all other persons or entities, public or private, whether domestic, foreign or international; and
sign contracts entered into by the BSP, notes and securities issued by the BSP, all reports, balance sheets, profit and loss statements, correspondence and other documents of the BSP.
Governor Amando M. Tetangco, Jr. Past Governors
Profile of the Governor
Amando M. Tetangco, Jr. assumed office as Governor of the Bangko Sentral ng Pilipinas in July 2005. He is a
career central banker, occupying different positions in the organization in a span of over three decades. Immediately prior to his appointment as BSP Governor, he was Deputy Governor in-charge of the Banking Services Sector, Economic Research and Treasury.
As BSP Governor, he is also the Chairman of the Monetary Board, Anti-Money Laundering Council (AMLC) and Philippine International Convention Center (PICC); Vice-Chairman of the Agriculture Credit Policy Council (ACPC); Member of the Capital Market Development Council (CMDC), Export Development Council (EDC), PhilExport Board of Trustees
(PHILEXPORT), Philippine Export-Import Credit Agency (PHILEXIM); and Director of Philippine Deposit Insurance Corporation (PDIC), National Development Council (NDC) and National Home Mortgage Finance Corporation (NHMFC).
He also represents the country in various international and regional organizations, including the Executive Meeting of East Asia and Pacific (EMEAP) Central Banks; ASEAN and ASEAN+3; South East Asia Central Banks (SEACEN); South East Asia, New Zealand and Australia (SEANZA); Center for Latin American Monetary Studies (CEMLA); and Asia-Pacific Economic Cooperation (APEC). He is the
Governor for the Philippines in the International Monetary Fund (IMF) and the Alternate Governor in the World Bank (WB) and in the Asian Development Bank (ADB).
Before joining the Central Bank of the Philippines in 1974, Mr. Tetangco was connected with the Management Services Division of accounting firm SGV & Co.
Mr. Tetangco took up AB Economics at the Ateneo de Manila University where he graduated cum laude. He took up graduate courses in business administration in the same institution. As a central bank scholar, Mr. Tetangco took up his MA in Public Policy and Administration (concentration in Development
Economics) at the University of Wisconsin in Madison, USA. Earlier, he finished his elementary and high school education at Don Bosco Academy in Pampanga.
Mr. Tetangco is married to Elvira Ma. Plana. They have three children: a son and two daughters.
Central Bank Governors
Name Tenure
Miguel Cuaderno, Sr.
3 January 1949 - 31 December
1960
Andres V. Castillo 6 January 1961 -
31 December 1967
Alfonso Calalang 1 January 1968 - 9 January 1970
Gregorio S. Licaros
10 January 1970 - 15 January
1981
Jaime C. Laya 16 January 1981
- 18 January 1984
Jose B. Fernandez, Jr.
19 January 1984 - 19 February
1990
Jose L. Cuisa, Jr. 20 February 1990
- 2 Juy 1993
Bangko Sentral Governors
Name Tenure
Gabriel C. Singson
6 July 1993 - 5 July 1999
Rafael B. Buenaventura
6 July 1999 - 3 July 2005
Amando M. Tetangco, Jr.
4 July 2005-Present
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