FMGT 65 Flashcards
What is the mode of payment in 9000 BCE?
Exchange of excess products like cattle and agricultural products
What are the people of Near East writing in around 8000 BCE?
Record of agricultural production and other commercial transactions
When did the Mesopotamian civilization’s writing system became increasingly formal?
Towards the end of 4000 BC
When is the apparent banking system first appeared in 4000 BC according to Neil Fergusson?
Babylonia
What is the earliest kind of commodity money?
Clay tablets
This was supplanted by commodity money
Bartering
These are found in Indian Ocean and started to be used as legal tender and, therefore, a recognized form of commodity money in China about 1500 BC
Cowry shells
Around 1000-200 BCE, the Chinese employed these as a form of commerce
Spherical metal coins and small bronze
These are first created in Lydia about 560 BCE
Crude Coins
Macedonian King Alexander the Great set the silver to gold ratio at what ratio?
Ten to one ratio
They started minting and circulating silver coins in 269 BCE
Rome
Where was the first paper money created and utilized?
China
In 1860, Western Union introduced the first what?
telegram-based electronic money transfer
What is the first credit card that was created by John Biggins in 1946?
Charge-it-card
When does Bitcoin and cryptocurrency first appeared?
2009
What are the types of money?
Fiat, commodity, representative, fiduciary, and commercial bank money
What are the functions of money?
- A medium of exchange
- Unit of account
- A store of value
The ability to trade goods and
services is money’s primary and most significant application.
It acts as a means of exchange that enables individuals who
use it to readily get what they need since it is a widely
recognized form of payment.
A medium of exchange
Money works as a shared benchmark for
determining the worth of goods and services by serving as this. It is reliable and makes it simple to compare
the value of a $1 Coke to a $50 chair. However, it would be
more difficult for me to comprehend their values if I had to
pay for the drink with pencils and the chair with apples.
Unit of account
Additionally, money has to be this, which means it must hold its value over time. It must
be functional as a trustworthy means of trade and be able to
be saved, stored, and retrieved. I couldn’t “Stack My Apples”
and keep becoming richer if I exchanged a lot of chairs for
apples. They would eventually be worth LESS when they
become brittle and WORTHLESS when they get spoilt.
A store of value
What are the features of money?
- Fungibility
- Divisibility
- Robustness
- Portability
- Recognizability
- Value stability
- Limited supply
if it may be used in
place of other forms of payment. For instance, despite any
stains or rips, every $1 note is valued the same as every other
dollar bill. In trade, a damaged apple would not be
equivalent to an unbruised apple.
Fungibility
Possibility of division. Ex: Four equal quarters
may be made from a $1 note.
Divisibility
It must be able to endure the abuse that
comes when it goes from hand to hand.
Robustness
It ought to be simple to carry and move about
Portability
Its worth must be clear to understand. A $1
note is designated with a “1,” whereas a ten-dollar bill is
designated with a “10.” You can quickly assess and contrast their
value.
Recognizability
The value ought to be steady over an
extended length of time.
Value stability
What qualities define good money?
- Recognizable
- Stable
- Versatile
- Liquidity
- Trusted
What is money made of?
25% linen and 75% cotton
The means of trade must be money. It must thus be something
you can exchange for something else. Money is a useful
instrument for any trade since it has worth, which is
acknowledged by both sides of a transaction.
A means of exchange
Set of tools used by a nation’s central bank to control the overall money supply and promote economic growth and employ strategies such as revising interest rates and changing bank reserve requirements
Monetary policy
Types of Monetary policy?
• Contractionary policy
• Expansionary policy
monetary measure to reduce
government spending or the rate of monetary expansion by a
central bank. It is a macroeconomic tool used to combat rising
inflation.
Contractionary policy
Increasing taxes reduces the money supply and decreases the
purchasing power of consumers. It may also slow down
unsustainable production or lower the value of assets.
• Reducing government spending in areas such as subsidies, welfare
programs, contracts for public works, or the number of government
employees
Fiscal policy
a form of macroeconomic policy that
seeks to encourage economic growth. This can
consist of either monetary policy or fiscal policy (or a combination of
the two). It is part of the general policy prescription of Keynesian
economics, to be used during economic slowdowns and recessions in
order to moderate the downside of economic cycles.
Expansionary policy
A type of expansionary policy where policies enacted by a government that
often increases or decreases the money supply to make changes to
the economy. In other words, governments can directly give money
to individuals, businesses, or taxpayers. Alternatively, to slow the
economy, it can take it away
Expansionary fiscal policy
A type of expansionary policy where it works by expanding the money supply
faster than usual or lowering short-term interest rates. It is enacted by
central banks and comes about through open market operations, reserve
requirements, and setting interest rates.
Expansionary Monetary policy
This is a goal of monetary policy where Contractionary monetary policy is used to temper it and
reduce the level of money circulating in the economy. Expansionary
monetary policy fosters inflationary pressure and increases the
amount of money in circulation.
Inflation
This is a goal of monetary policy where ▪ An expansionary monetary policy decreases as a higher money supply and attractive interest rates stimulate business
activities and expansion of the job market.
Unemployment
This is a goal of monetary policy where between domestic and foreign currencies can be affected by monetary policy. With an increase in the money supply,
the domestic currency becomes cheaper than its foreign exchange.
Exchange rates
the Federal Reserve Bank buys bonds
from investors or sells additional bonds to investors to change the number
of outstanding government securities and money available to the economy
as a whole.
Open market operations
The central bank may change this or the
required collateral that it demands. In the U.S., this rate is known as the discount rate. Banks will loan more or less freely depending on this
Interest rates
Authorities can manipulate this, the funds that banks must retain as a proportion of the deposits made by their
customers to ensure that they can meet their liabilities.
Reserve requirements
It was established on 3 July 1993 pursuant to the
provisions of the 1987 Philippine Constitution
and the New Central Bank Act of 1993
Bangko Sentral ng Pilipinas
The primary objective of BSP’s monetary policy
Promote a low and stable inflation conducive to a balanced and sustainable economic growth
refer to the buying/selling of government
securities, lending/borrowing against underlying assets as
collateral, acceptance of fixed-term deposits, foreign exchange
swaps, and the use of other monetary instruments of the
Bangko Sentral aimed at influencing the underlying demand
and supply conditions for central bank money
Monetary operations
The promotion of “Financial Stability” is a formal mandate that
is uniquely ascribed to the Bangko Sentral ng Pilipinas (BSP).
This is provided for in the amended BSP Charter (Republic Act
No. 11211) which was signed by President Duterte in February
2019.
Systematic risk management
The Bangko Sentral has supervision over the operations of
banks and exercises such regulatory powers as provided in the
New Central Bank Act and other pertinent laws over the
operations of finance companies and non-bank financial
institutions performing quasi-banking functions.
Financial supervision
Payment systems are essential to the effective functioning of
financial systems worldwide. They provide the channels
through which funds are transferred among banks and other
institutions to discharge payment obligations arising from
economic and financial transactions across the entire economy
Payments and settlements system oversight
The BSP has the exclusive power and authority to issue the
national currency. BSP’s notes and coins are issued against, and
in amounts not exceeding, the assets of the BSP. 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.
Currency Management
In line with its strategic mandate to promote broad and
convenient access to high quality financial services and
consider the interest of the general public, the BSP undertakes
various programs and policy initiatives aimed at enhancing
financial inclusion, financial education, and consumer
empowerment.
Inclusive finance
The BSP extends discounts, loans and advances to banking
institutions in order to influence the volume of credit
consistent with objective of price stability and maintenance of
financial stability. It also grants loans or advances to banking
institutions in precarious financial condition or under serious
financial pressures, subject to certain conditions.
Loans and credit operation
The BSP maintains a healthy level of international
reserves to provide liquidity support in times of volatility in
the exchange rate and balance of payments.
International reserves management
The BSP’s mandate on international operations under the
purview of the International Operations Department is to
support the promotion and maintenance of price stability,
external sustainability, and the integrity and value of the
Philippine peso through the effective management of external
debt, foreign investments and other foreign exchange (FX)
transactions
International operations
The BSP’s proactive engagement in various regional and
international fora significantly contributed to domestic policy
formulation; assured partners through established crisis
prevention safety nets; broadened opportunities offered by
financial integration and cooperation agreements; and raised
skills and knowledge through capacity building initiatives.
International economic cooperation
The BSP’s Economic Education Portal provides the general
public a guided access on the BSP’s collection of information on
economic education for them to better understand and
appreciate the role of the BSP, as the country’s central bank, in
the Philippine economy. As the portal strategically presents the
BSP’s available learning materials, it aims to develop and
strengthen the public’s knowledge on economic concepts that
could eventually guide them in making sound economic and
financial decisions
Economic education
What are the core values of BSP?
Excellence
Patriotism
Integrity
Solidarity
Accountability
A set of institutions, such as banks, insurance companies, and stock exchanges, that permit the exchange of funds.
Financial system
What is the Philippines financial system structure?
Includes banks, investment houses, finance companies, investment
companies, securities dealers/brokers, pawnshops, lending investors,
non-stock savings and loan associations, venture capital corporations,
and credit card companies, which are under BSP’s supervision.
Examples of universal banks
AMA bank
BDO
BPI
Chinabank
Examples of commercial banks
Metrobank
Security bank
Rcbc
Thrift banks
PsBank
Citibank
PR savings bank
Examples of rural banks
Agribank
Examples of cooperative banks
Cooperative bank of Cebu
Examples of Islamic bank
Amanah Islamic bank
Ex of government owned bank
Development bank of the Philippines
