Central Banking in the Philippines: Chronology of Events

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    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 Republic Act No. 7653 was passed establishing the Bangko Sentral ng Pilipinas (BSP), replacing CBP as the country’s central monetary authority.

    As prescribed by the New Central Bank Act,the main functions of the BSP are: 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. It currently adheres to a market-oriented foreign exchange rate policy such that its role is principally to ensure orderly conditions in the market; and finally the BSP functions as the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and GOCCs.

    14 February 2019 Republic Act No. 11211 was passed amending RA No. 7653. The charter amendments bolster the capability of the BSP to safeguard price stability and financial system stability.