Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas (lit. Central Bank of the Philippines; commonly abbreviated
as BSP in both Filipino and English) is the central bank of the Philippines. It was established on 3
July 1993, pursuant to the provision of Republic Act 7653 or the New Central Bank Act of 1993.[2]
n 1900, the First Philippine Commission passed Act No. 52,[3] which placed all banks under the
Bureau of the Treasury and authorizing the Insular Treasurer to supervise and examine banks and
all banking activity. In 1929, the Department of Finance, through the Bureau of Banking, took over
bank supervision.
By 1933, a group of Filipinos had conceptualized a central bank for the Philippine Islands.[4] It came
up with the rudiments of a bill for the establishment of a central bank after a careful study of the
economic provisions of the Hare–Hawes–Cutting Act, which would grant Philippine independence
after 12 years, but reserving military and naval bases for the United States and imposing tariffs and
quotas on Philippine exports. However, the Hare–Hawes–Cutting Act would be rejected by
the Senate of the Philippines at the urging of Commonwealth President Manuel L. Quezon. This
Senate then advocated a new bill that won United States President Franklin D. Roosevelt's support,
this would be the Tydings–McDuffie Act, which would grant Philippine independence on July 4,
1946.
Under the Commonwealth, discussions continued regarding the idea of a Philippine central bank that
would promote price stability and economic growth. The country's monetary system then was
administered by the Department of Finance and the National Treasury, and the Philippine piso was
on the exchange standard using the United States dollar, which was backed by 100 percent gold
reserve, as the standard currency.
As required by the Tydings–McDuffie Act, the National Assembly of the Philippines in 1939 passed a
law establishing a central bank. As it was a monetary law, it required the approval of the President of
the United States; Franklin D. Roosevelt did not give his. A second law was passed in 1944 under
the Japanese-controlled Second Republic during the Second World War, but the 1945 arrival of
American liberation forces, aided by Philippine Commonwealth troops and recognised guerrillas,
aborted its implementation
Third Republic and martial law[edit]
Shortly after President Manuel Roxas assumed office in 1946, he instructed then-Finance Secretary
Miguel Cuaderno, Sr. to draw up a charter for a central bank.[5] The establishment of a monetary
authority became imperative a year later as a result of the findings of the Joint Philippine-American
Finance Commission chaired by Cuaderno. The Commission, which studied Philippine financial,
monetary, and fiscal problems in 1947, recommended a shift from the dollar exchange standard to a
managed currency system. A central bank was necessary to implement the proposed shift to the
new system.
Roxas then created the Central Bank Council to prepare the charter of a proposed monetary
authority. It was submitted to Congress in February 1948. By June of the same year, the newly
proclaimed President Elpidio Quirino, who succeeded President Roxas, affixed his signature
on Republic Act (RA) No. 265, the Central Bank Act of 1948.[6] On January 3, 1949, the Central Bank
of the Philippines was formally inaugurated with Miguel Cuaderno, Sr. as the first governor.[7] The
main duties and responsibilities of the Central Bank were to promote economic development and
maintain internal and external monetary stability.[8]
Over the years, changes were introduced to make the charter more responsive to the needs of the
economy. On November 29, 1972, President Ferdinand Marcos' Presidential Decree No.
72[9] amended Republic Act No. 265, emphasizing the maintenance of domestic and international
monetary stability as the primary objective of the Central Bank. The Bank's authority was also
expanded to include regulation of the entire financial system of the Philippines and not just
supervision of the banking system. In 1981, RA 265, as amended, was further improved to
strengthen the financial system,[10] among the changes was the increase in the capitalization of the
Central Bank from Php10 million to Php 10 billion.[11]
In the 1973 Constitution, the interim Batasang Pambansa (National Assembly) was mandated to
establish an independent central monetary authority. Presidential Decree No. 1801[12] designated the
Central Bank of the Philippines as the central monetary authority (CMA). Years later, the 1987
Constitution adopted the CMA provisions from the 1973 Constitution that were aimed essentially at
establishing an independent monetary authority through increased capitalization and greater private
sector representation in the Monetary Board.[13]
Present[edit]
In accordance with a provision in the 1987 Constitution, President Fidel V. Ramos signed Republic
Act No. 7653, otherwise known as the New Central Bank Act,[14] into law on June 14, 1993.[15][16] The
law provides for the establishment of an independent monetary authority to be known as the Bangko
Sentral ng Pilipinas, its primary objective being the maintenance of price stability. This objective was
only implied in the old Central Bank charter. The law also gives the Bangko Sentral fiscal and
administrative autonomy which the old Central Bank did not have. On July 3, 1993, the New Central
Bank Act took effect.[17]
BSP Branch in Zamboanga City.
On the evening of September 26, 2012, a Wednesday, the BSP website was hacked by a group
named Anonymous Philippines in a protest against the recently passed Cybercrime Prevention Act
of 2012.[18][19] The website was promptly restored in the early hours of the following day.[20]
On April 23, 2013, The Asian Banker named the BSP as the Best Macroeconomic Regulator in the
Asia-Pacific Region for 2013 in The Asian Banker Leadership Achievement
Awards in Jakarta, Indonesia.[21][22] The BSP was cited as a “good, strong, and fair-minded regulator.”
About a month later, the BSP was given the country award by the Child and Youth Finance
International in its 2013 International Summit in Istanbul, Turkey, in recognition of its initiative to
integrate financial education in the Philippine elementary school curriculum.[23]
Roles and responsibilities[edit]
As prescribed by the New Central Bank Act,[24] the main functions of the Bangko Sentral are:
1. Liquidity management, by formulating and implementing monetary policy aimed at
influencing money supply, consistent with its primary objective to maintain price stability,
2. 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,
3. Lender of last resort, by extending discounts, loans and advances to banking institutions
for liquidity purposes,
4. Financial supervision, by supervising banks and exercising regulatory powers over non-
bank institutions performing quasi-banking functions,
5. Management of foreign currency reserves, by maintaining 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,
6. Determination of exchange rate policy, by determining the exchange rate policy of the
Philippines. Currently, the BSP adheres to a market-oriented foreign exchange ratepolicy,
and
7. Being the banker, financial advisor and official depository of the Government, its political
subdivisions and instrumentalities and GOCCs.
Organization of the Bangko Sentral[edit]
The basic structure[25] of the Bangko Sentral includes:
The Monetary Board, which exercises the powers and functions of the BSP, such as the
conduct of monetary policy and supervision of the financial system;
The Monetary Stability Sector, which takes charge of the formulation and implementation of
the BSP's monetary policy, including serving the banking needs of all banks through accepting
deposits, servicing withdrawals and extending credit through the rediscounting facility;
The Supervision and Examination Sector, which enforces and monitors compliance to
banking laws to promote a sound and healthy banking system; and
The Resource Management Sector, which serves the human, financial and physical resource
needs of the BSP.[26]
The powers and function of Bangko Sentral are exercised by its Monetary Board, whose seven
members are appointed by the President of the Philippines. As provided for by RA 7653 or the New
Central Bank Act, one of the government sector members of the Monetary Board must also be a
member of Cabinet. Members of the Monetary Board are prohibited from holding certain positions in
other government agencies and private institutions that may give rise to conflicts of interest. The
members have fixed and overlapping terms, except for the Cabinet Secretary representing the
incumbent administration.[27]
