BusiFin 2

Question 1

is primarily responsible for defining and regulating
the financial system.

Answer 1

The government

Question 2

describes collectively the financial markets, the
participants, and the instruments and
securities that are traded in the said
markets.

Answer 2

Financial System

Question 3

The functions of the financial systems are to:

Answer 3

1) Provide the funds from the savings units (lenders) to the deficit units (borrowers);
2) Provide a medium of exchange;
3) Provide a mechanism for risk sharing; and
4) Provide a channel through which the central bank can influence the economy, in general and the financial system in particular

Question 4

Financial System Participants

Answer 4

1. Households or consumers;
2. Financial institutions
3. Non-financial firms
4. The government
5. The central bank; and
6. Foreign participants

Question 5

are generally described as that group receiving income, majority of which typically come from wages and salaries. Such income is spent on goods and services and a part is saved (if there is enough to save).

Answer 5

Households or consumers

Question 6

are equal to current income less current expenditures

Answer 6

Gross savings

Question 7

are the firms that bridge the gap between the surplus units (SU) or INVESTORS/LENDERS and the deficit units (DU) or borrowers.
* They channel funds from the lender to borrowers. They include depository institutions and non-depository institutions.

Answer 7

Financial institutions

Question 8

is meant the national, provincial, city, and barangays or towns compromising the Philippines as a whole.

Answer 8

The Government

Question 9

is part of the government that we consider as participant in the financial system.

Answer 9

Philippine treasury

Question 10

and all other central banks of the different countries are mandated to assure that their respective countries have a healthy and stable financial system.
- is the banker to banks
providing various services to banks.

• are the monetary policymakers of their respective countries.

Answer 10

The Central bank

Question 11

refer to the participants from the rest of the world-households, governments, financial and non-financial firms, and central banks.
* International trade and International finance are parts of globalization. As globalization affects the entire world, the role of foreign participants in the financial system has become more important.

Answer 11

Foreign participants

Question 12

is at the top of the structure, the one mandated to oversee the financial system of the country It is the agency that is tasked to ensure that the country has a healthy financial system and a healthy economy.
* It is the central monetary authority.

Answer 12

Banko Sentral ng Pilipinas and the Philippine financial system

Question 13

• The government banking institutions include the:

Answer 13

1. Philippine National Bank
2. Development Bank of the Philippines
3. Land Bank of the Philippines
4. Amanah Islamic Bank

Question 14

Non-bank financial institutions are:

Answer 14

1. Private Non-Bank Institutions
2. Government Non-Bank Financial Institutions
   Example of Private non-bank financial institutions are:
   Investment bank/houses, investment companies, finance companies, securities dealers and brokers, non-stock savings and loans associations, pawnshops, lending, fund managers, insurance companies.
   Mamolde Financial
   PAW WAN SHOP ALAWAN
   MOLHUILLIER
   COCOLIFE
   CEBUANA

Question 15

• Financial institutions not under BSP are the cooperatives that are handled by the

Answer 15

Cooperative development authority

Question 16

• Private Insurance companies are under

Answer 16

Insurance commission

Question 17

• Other financial institutions are also overseen by the

Answer 17

Securities and exchange commissions

Question 18

Current BSP GOVERNOR
(July 3,2023-PRESENT)

Answer 18

Eli M. Remolona JR.

Question 19

The powers and function of BSP are
exercised by its Monetary Board, which has

Answer 19

7 members appointed by the President of the
Philippines.

Question 20

1 member of the monetary board must be a
member of the ________________ (under new
Central Bank Act) with with five full-time
members from the private sector.

Answer 20

Cabinet appointed by the
President of the Philippines

Question 21

The Monetary Board meets at least

Answer 21

Once a week

Question 22

The Board may be called to a meeting by

Answer 22

the Governor of the BSP or by 2 other
members of the Board.

Question 23

Authority of the Monetary Board

Answer 23

Issue rules and regulations

Direct the management, operations, and administration of the BSP, reorganize its personnel , and issue such rules and regulations as it may deem necessary or convenient for this purpose.

Establish human resource management system.

Adopt annual budget for and authorized such expenditures by the BSP in the interest of the effective administration and operation of the BSP.

Indemnify its members and other officials of the BSP.

Question 24

Measures or actions taken by the central
bank to regulate the supply of money in
the economy.

• actions of the BSP are
  aimed at influencing the timing, cost and
  availability of money credit , as well as
  other financial factors , for the purpose of
  stabilizing the price level.

Answer 24

Monetary Policy

Question 25

If the BSP believes that money supply is in
excess of a desired level , then it can take
action to reduce the money supply. This is
referred to as

Answer 25

Contractionary monetary policy

Question 26

On the other hand, if based on the BSP
assessment – the liquidity situation is tight
and there is a need to increase money supply
, it implements an

Answer 26

Expansionary monetary policy

Question 27

How does BSP implements
monetary policy?

Answer 27

The BSP implements monetary policy
using various instruments to achieve the
inflation target set by the National
Government.

Raising /reducing the BSP’s policy interest rates;

Increasing/decreasing the reserve requirement ;

Encouraging / discouraging deposits in the special savings account
facility by banks and trust entities of BSP supervised financial institutions;

Increasing / decreasing the rediscount rate on loans extended by the BSP
to banking institutions on a short-term basis against eligible collaterals of
bank’s borrowers;

Outright sales/purchased of the BSP’s holdings of government securities.

Question 28

The BSP’s primary monetary policy
instruments are its

Answer 28

overnight reserves repurchase (borrowing) rate and overnight
repurchase (lending) rate.

Question 29

The Philippine Deposit Insurance Corporation
(PDIC) was established on

Answer 29

June 22, 1963 by RA 3591.

Question 30

the maximum deposit
insurance coverage

Answer 30

P500,000.00 per
deposit per bank

Question 31

To promote and safeguard the interest of the
depositing public by way of providing
permanent and continuing insurance
coverage on all insured deposits.

Answer 31

Depository Policy

Question 32

To strengthen the mandatory deposit
insurance coverage system to generate
, preserve, maintain faith and
confidence in the country’s banking
system, and protect it from illegal
schemes and machinations.

Answer 32

Financial Stability

Question 33

PDIC insures valid deposits in domestic offices of
its member- banks, as follows:
By Deposit Type:

Answer 33

Savings

Special Savings

Demand/Checking

Negotiable Order of Withdrawal (NOW)

Time Deposits

Question 34

By Deposit Account

Answer 34

Single Account

Joint Account

Account “By” , “In Trust For” (ITF) or
“For the Account Of” (FAO) another
person

Question 35

By Currency

Answer 35

Philippine peso

Foreign currencies considered as part
of BSP’s international reserves

Question 36

Are all banks members of PDIC?

Answer 36

Membership of banks to PDIC is
mandatory; hence, all operating banks are
members of PDIC.

Question 37

Shall the depositor pay any insurance
premium to PDIC?

Answer 37

No. Insurance premium is paid by the
banks, not by the depositors. The bank is
assessed 1/5 of 1% per annum of the
assessment base of the bank.