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Ch2: the philippine financial system Flashcards

1
Q

The GOVERNMENT is primarily responsible for _____________ and _______________ the financial system. Particularly the _______________________________________.

A

The GOVERNMENT is primarily responsible for ((defining and regulating)) the financial system. Particularly the ((Bangko Sentral ng Pilipinas))

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2
Q

Financial System is also known as?

A

Monetary System

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3
Q

The Financial System describes collectively the __________________, the ______________, and the __________________ and _____________ that are traded in the said markets.

A

The Financial System describes collectively the ((financial markets)), the ((participants)), and the ((instruments)) and ((securities)) that are traded in the said markets.

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4
Q

this allows the exchange of funds among several institutions.

A

The Financial System

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5
Q

enumerate the functions of the financial system.

A

(4)
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.

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6
Q

this policy is regulated, monitored, and indemnified by the BSP

A

Monetary Policy

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7
Q

this policy is regulated by the government

A

Fiscal Policy
- (Other rules/policies)

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8
Q

There are 6 participants or sectors in the financial system. (they interact with each other and are connected through the financial system) enumerate them.[6 HFNTTF]

A

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

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9
Q

Households or consumers are generally described as that ___________________________, majority of which typically come from ___________ and ___________.

A

Households or consumers are generally described as that group receiving income, majority of which typically come from wages and salaries.

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10
Q

Such income is spent on goods and services and a part is saved (if there is enough to save).

A
  1. Households
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11
Q

Gross savings are equal to?

A

current income less current expenditures.

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12
Q

E.g employees, consumers, buyers, workers, laborers, etc.

A
  1. Households
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13
Q

What are the firms that bridge the gap between the (SU) and (DU)

A
  1. Financial institutions
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14
Q

what does SU and DU mean?

A
  • the surplus units (SU) or INVESTORS/LENDERS and
  • the deficit units (DU) or borrowers.
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15
Q

They channel funds from the lender to borrowers. They include depository institutions and non-depository institutions.

A
  1. Financial institutions
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16
Q

E.g. Rural banks, commercial banks, cooperatives, etc

A
  1. Financial institutions
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17
Q
  • These are the intermediaries/network/communication for the consumers/households and the BSP so that the BSP can see into our monetary behavior and manage the monetary system
  • Sa kanila nanggagaling ung funds na sinasahod/mga inuutang ng mga consumers or other public/private institution.
A
  1. Financial institutions
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18
Q

By government, it meant the __________, _____________, ________, and _____________ or __________ compromising the Philippines as a whole.

A

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

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19
Q

The ____________________________ is part of the government that we consider a __________________ in the financial system.

A

The Philippine Treasury is part of the government that we consider a participant in the financial system.

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20
Q

When the Phil. Treasury issues their own ____________, they act as a ______________/_________________.

A

When the Phil. Treasury issues their own securities , they act as a borrowers/deficit units.

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21
Q

When the Phi. Treasury buys _______________, they act as ____________ or __________/_________________.

A

When the Phi. Treasury buys securities, they act as investors or savers/surplus units

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22
Q

holds the funds, our market securities, and bonds they invest internationally, or let other government agencies borrow from the funds, etc. but they also borrow money depending on the supply of money

A

The Philippine Treasury

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23
Q

Bangko Sentral ng Pilipinas (Central Bank of the Philippines) and all other central banks of the different countries are mandated to assure that their respective countries have a _____________ and __________________________________

A

healthy and stable financial system

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24
Q

Any _____________________ is the banker to banks providing various services to banks.

A

(5) central banks

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25
Q

Are the monetary policymakers of their respective countries?

A
  1. The central bank
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25
Q

Refer to the participants from the rest of the world - _______________, _________________, __________ and ___________________, and ________________.

A
  1. Foreign participants
    - households,
    - governments,
    - financial and
    - non-financial firms, and
    - central banks.
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26
Q

_______________________ and ______________________ are parts of globalization.

A

International trade and International finance

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26
Q

As globalization affects the entire world, the role of ____________________ in the financial system has become more important.

A
  1. Foreign participants
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27
Q

E.g. foreign investors(foreigner na nagtatayo ng business dito), foreign countries, foreign consumers (mga tourist), etc.

A
  1. Foreign participants
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28
Q

Is at the top of the structure, the one mandated to oversee the financial system of the country.

A

Bangko Sentral ng Pilipinas

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29
Q

BSP is the agency that is tasked to ensure that the country has a?

A

healthy financial system and a healthy economy.

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30
Q

It is the central monetary authority.

A

Bangko Sentral ng Pilipinas

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31
Q

A Healthy financial system means that?

A

means that there is a balance in the monetary supply and demand

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32
Q

The government banking institutions include?

A
  1. Philippine National Bank
  2. Development Bank of the Philippines
  3. Land Bank of the Philippines
  4. Amanah Islamic Bank
33
Q

Non-bank financial institutions are?

A
  1. Private Non-Bank Institutions
  2. Government Non-Bank Financial Institutions
34
Q

Examples of Private non-bank financial institutions
are? (give at least 3)

A
  • Investment bank/houses,
  • investment companies,
  • finance companies,
  • securities dealers and brokers,
  • non-stock savings and loans associations,
  • pawnshops,
  • lending,
  • fund managers,
  • insurance companies (e.g. cocolife, sunlife, etc.)
35
Q

Examples of Government Non-bank financial
institutions are?

A
  • Government Service Insurance System (GSIS)
  • social security system (SSS)
  • Pag-ibig
36
Q

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

A

COOPERATIVE DEVELOPMENT AUTHORITY (CDA)

37
Q

Private Insurance companies are under?

A

INSURANCE COMMISSION

38
Q

Other financial institutions are also overseen by the? These organizations are however mandated to submit reports to BSP so that BSP can monitor their operations and effects on the financial system of the country.

A

SECURITIES AND EXCHANGE COMMISSIONS

39
Q

Partnerships and corporations are registered in the?

A

SECURITIES AND EXCHANGE COMMISSIONS (SEC)

40
Q

Sole proprietorships are registered in the?

A

DEPARTMENT OF TRADE AND INDUSTRY (DTI)

41
Q

Past Governors of BSP?

A
  • Miguel Cuaderno , Sr. ( 1949-1960)
  • Andres Castillo (1961-1967)
  • Alfonso Calalang (1968-1970)
  • Gregorio Licaros (1970-1981)
  • Jaime C. Laya ( 1981-1984)
  • Jose B. Fernandez, Jr.(1984-1990)
  • Jose L. Cuisa , Jr. (1990-1993) ***
  • Gabriel C. Singson (1993-1999)
  • Rafael B. Buenaventura (1999-2004)
  • Amando M. Tetangco Jr. (2005-2017)
  • Nestor Espenilla Jr. (2017-2019)
  • Benjamin Diokno (2019-2022)
  • Felipe Medalla (2022-2023)
42
Q

Current BSP GOVERNOR

A

Eli M. Remolona, Jr. (July 3,2023-PRESENT)

43
Q

CENTRAL BANK AND ITS MANDATES (OBJECTIVES)

A
  • 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.
44
Q

CENTRAL BANK AND ITS MANDATES (RESPONSIBILITIES)

A
  • The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercise regulatory powers over non-bank financial institutions with quasi-banking functions.
45
Q

The powers and function of BSP are exercised by its?,

A

Monetary Board

46
Q

How many are the members of the monetary board?

A
  • has 7 members appointed by the President of the Philippines> 1 member of the monetary board must be a member of the Cabinet appointed by the President of the Philippines (under new Central Bank Act)
    five full-time members from the private sector.
    The Governor
    1. Governor, 2. Monetary Stability Sector, 3. Supervision and Examination, 4. Sector Resource Management Sector, 5. Security Plant Complex
47
Q

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 give rise to conflict of interest.

A

The new Central Bank Act

48
Q

who is the exemption to the new Central Bank Act?

A

the Appointed Cabinet member

49
Q

true or false?

The Governor and other members of the Monetary board serve terms of five years and may be removed at any point.

A

false

The Governor and other members of the Monetary board serve terms of ((six years)) and ((may only be removed for a cause.))

50
Q

The Monetary Board meets at least?

A

at least once a week
- usually every Thursday but on some occasions, it convenes to discuss urgent issues.

51
Q

The Monetary Board may be called to a meeting by
the?

A

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

52
Q

Authority of the Monetary Board

A

(5) (IDEAI)
1. Issue rules and regulations
2. 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.
3. Establish human resource management system.
4. Adopt annual budget for and authorized such expenditures by the BSP in the interest of the effective administration and operation of the BSP.
5. Indemnify its members and other officials of the BSP.

53
Q

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

A

Monetary Policy

54
Q

true or false?

Fiscal policy actions of the BSP are aimed at influencing the timing, cost and effectivity of money credit, as well as other financial factors, for the purpose of disrupting the price level.

A

false

((Monetary)) policy 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.

55
Q

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?

A

CONTRACTIONARY MONETARY POLICY

56
Q

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?

A

EXPANSIONARY MONETARY POLICY

57
Q

true or false?

The BSP implements fiscal policy using a few instruments to achieve the deflation target set by the Local Government.

A

false

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

58
Q

How does the BSP implement monetary policy?

A

(5) (RIEIO/ORIIE)
- 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.

59
Q

Increases the interest rates of businesses(less take home income, less buying power), and decreases the government spendings(lessens projects therefore lessens employments therefore lessens income)

A

CONTRACTIONARY MONETARY POLICY

60
Q

Increases government spendings (more projects, more employment, more income), and decreasing taxes(more take home income)

A

EXPANSIONARY MONETARY POLICY

61
Q

The BSP’s primary monetary policy instruments are its________________________________________________ and ________________________________.

A

The BSP’s primary monetary policy instruments are its ((overnight reserves repurchase (borrowing) rate)) and ((overnight repurchase (lending) rate.))

62
Q

What does (PDIC) mean? When was it established? By what RA?

A

The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by RA 3591.

63
Q

Under the amended PDIC Charter, the corporation is mandated to provide ___________________________ and promote ____________________________ by providing the __________________ and ________________ deposit insurance up to the maximum deposit insurance coverage of P__________________ per __________ per ________

A

Under the amended PDIC Charter, the corporation is mandated to provide ((depositor protection)) and promote ((financial stability)) by providing the ((PERMANENT and CONTINUING)) deposit insurance up to the maximum deposit insurance coverage of ((P500,000.00 per deposit per bank))

64
Q

state the PDIC Public Policy Objectives

A
  • Depositor Protection
  • Financial Stability
65
Q

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

A

PDIC Public Policy Objectives:
Depositor Protection

66
Q

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.

A

PDIC Public Policy Objectives:
Financial Stability

(remember: to generate, preserve, maintain faith and confidence) (and protect it from illegal schemes and machinations)

67
Q

PDIC pays deposit insurance on all valid deposits up to the ______________________________________ of P 500,000.00 per depositor of a closed bank.

A

Maximum Deposit Insurance Coverage (MDIC)

68
Q

For purposes of computing __________________, accounts maintained in the same ________ and ____________ for a depositor’s benefit, whether in his ________________ or in the ____________________, are _____________________ and in no case shall exceed to ____________.

A

For purposes of computing ((deposit insurance,)) accounts maintained in the same ((right and capacity)) for a depositor’s benefit, whether in his ((own name)) or in the ((name of others,)) are ((added together)) and in no case shall exceed to ((MDIC.))

69
Q

Deposits are considered valid if, upon determination by PDIC, these deposits are?

A
  • recorded in the bank’s records, and
  • are evidenced by inflow of cash
70
Q

What are covered by PDIC deposit insurance?

A

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

  1. By Deposit Type: (SSDNT)
    - Savings
    - Special Savings
    - Demand/Checking
    - Negotiable Order of Withdrawal (NOW)
    - Time Deposits
  2. By Deposit Account: (SJA)
    - Single Account
    - Joint Account
    - Account “By”, “In Trust For” (ITF) or “For the Account Of” (FAO) another person
  3. By Currency: (PF)
    - Philippine peso
    - Foreign currencies considered as part of BSP’s international reserves
71
Q

true or false?

Membership of banks to PDIC is voluntary; hence, few operating banks are members of PDIC.

A

false

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

72
Q

PDIC covers only the risk of a ________________ ordered by the ______________________. Thus, bank losses due to __________, _______, ____________________________ or ____________________________, _______________________, are not covered by PDIC.

A

PDIC covers only the risk of a ((bank closure)) ordered by the ((Monetary Board)). Thus, bank losses due to ((theft, fire, closure by reason of strike or existence of public disorder, revolution or civil war)), are not covered by PDIC.

not covered: (TFCR)
- theft
- fire
- closure by reason of strike or existence of public disorder
- revolution or civil war

73
Q

Insurance premium is paid by the __________, not by the ____________. The bank is assessed ______ of _____ per _________ of the assessment base of the bank.

A

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.

74
Q

How is insurance coverage determined?

  • In determining the insured amount, the outstanding balance of each account is adjusted, such that interests are updated, withholding taxes are deducted, accounts maintained by a depositor in the same right and capacity are added together; and whenever applicable, unpaid loans and other obligations of the depositor are deducted; and in no case shall insured deposit exceed P500,000.
  • R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or transactions:
  • Investment products such as bonds, securities and trust accounts;
  • Deposit accounts which are unfunded, fictitious or fraudulent;
  • Deposit products constituting or emanating from unsafe and unsound banking practices;
  • Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law.
A

ha?

75
Q

If I have deposits in several different insured banks, will my deposits be added together for insurance purposes?

No. Deposits in different banking institutions are insured separately. However, if a bank has one or more branches, the main office and all branch offices are considered as one bank. Thus, if you have deposits at the main office and at one or more branch offices of the same bank, the deposits are added together when determining deposit insurance coverage, the total of which shall not exceed P500,000.

A

ok

76
Q

Is there a need for a depositor to file his claim for insured deposit with PDIC?

Yes. Depositors will be advised through the national and/or local media and posters at the premises of the closed insured bank and other public places within the locality on the schedule of distribution of claim forms by PDIC, receiving of claim forms by PDIC, and the prescriptive date of filing claims by the depositors

A

yeah

77
Q

When should the depositor of a closed insured bank file his claim with PDIC?

The depositor of the closed insured bank has 24 months from date of bank takeover to file his deposit insurance claim.

A

nice

78
Q

What happens when the depositor of a closed bank fails to file his claim within the 24-month period?

All rights of the depositor with respect to the insured deposit shall no longer be honored. But he may still make a claim against the assets of the closed bank.

A

sheesh

79
Q

What processes are involved before PDIC starts servicing claims?

Deposit records are subjected to an examination prior to the start of servicing/settlement of claims. Claims are evaluated and processed according to PDIC’s standard procedures.

A

weh

80
Q

If the deposit account in a closed bank is more than P500,000.00, what happens to the excess of the maximum amount of insured deposit?

If the closed bank is not rehabilitated or taken over by another bank, amount in excess of the P500,000 coverage can still be claimed upon the final liquidation of the remaining assets of the closed bank. The claim may be filed with the Liquidator of the closed bank but payment of the said claim will depend on the bank’s available assets to settle its preferred claims (Government taxes, labor claims, secured credits and trust funds) and approval of the Liquidation Court. The schedule of payment beyond the P500,000.00 maximum insurance shall be based on priorities set by law.

A

wow

81
Q

How long does the pre-settlement examination take?

The length of time needed for the pre-settlement examination of deposit liabilities of a closed insured bank largely depends on the completeness and accuracy of records turned over by the Bank to PDIC and the number of deposit accounts to be examined.

A

👍

82
Q

Philippine National Bank used to be?

A
  • used to be overnment-owned, to semi-private, to privately owned by Lucio Tan
  • Lucio Tan also owns Asia Brewery, and Philippine Airlines

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