pre 1 Flashcards
It is a network of various financial institutions which creates, circulates and controls money and credit.
It interplays the supply and use of money
financial system
Elements of FS
- Financial Claims
- Financial Institutions
- Financial Markets
- Government Agencies
- Laws and Policies
Functions of Financial Institutions
- Investigation and Credit Analysis
- Matching the Supply and Demand for Funds
- Provision for Liquidity
Functions and Operations
- Liquidity Management.
- Currency issue.
- Lender of last resort.
- Financial Supervision
- Management of foreign currency reserves.
- Determination of exchange rate policy.
- Other activities.
The BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability.
Liquidity Managemen
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.
Currency issue
The BSP extends discounts, loans and advances to banking institutions for liquidity purposes.
Lender of last resort
The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions.
Financial Supervision
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.
Management of foreign currency reserves
The BSP determines the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy such that the role of BangkoSentral is principally to ensure orderly conditions in the market.
Determination of exchange rate policy
The BSP functions as the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations.
Other Activities
mainly responsible for the operations/activities related to monetary policy formulation and implementation
Monetary Stability Sector
mainly responsible for the regulation of banks and other BSP-supervised financial institutions
Supervision and Examination Sector
mainly responsible for the management of human, financial, and physical resources of the Bank
Resource Management Sector
responsible for the production of Philippine currency, security documents, and commemorative medals and medallions
Security Plant Complex
financial institutions owned by private individuals or corporations. They aim to generate profit by offering various financial services, such as accepting deposits, providing loans, and facilitating investments.
Private Banks
Large financial institutions that provide a broad range of services to individuals, businesses, and the government.
F:
* Accept deposits
* issue loans
* facilitate payments
* offter foreign exchange and investment services
Commercial Banks
Smaller financial institutions that focus on serving individual consumers and small businesses.
F:
* Accept savings and time deposits
* Provide small business loans, housing loans, and personal loans
* Promote savings and home financing
Thrift Banks
Banks that serve rural and agricultural areas to promote countryside development.
F:
* Provide agricultural loans for farmers and small businesses
* Accept small deposits
* Support rural economic growth
Rural Banks
Banks owned and operated by cooperative organizations to serve their members’ financial needs.
F:
* Provide loans and credit to cooperative members
* Accept deposits from members
* Support community-based businesses
Cooperative Banks (coop Banks)
financial institutions owned and operated by the Philippine government. Their primary goal is to support public welfare, economic development, and national priorities.
Government Banks
A government-owned bank focusing on agricultural and rural development.
F:
* Provide financial services to farmers and fisherfolk
* Support agrarian reform and rural development
* Offer loans to local government units (LGUs) and state agencies
Land Bank of the Philippines (LBP)
A government bank that finances infrastructure, industries, and developmental projects.
F:
* Fund large-scale projects (transportation, energy, water supply)
* Support small and medium enterprises (SMEs)
* Provide development financing for public services
Development Bank of the Philippines (DBP)
The only bank in the Philippines authorized to offer Islamic banking services.
F:
* Provide Shari’ah-compliant financial products (no interest-based transactions)
* Support Muslim communities through financial inclusion
* Facilitate trade and investments aligned with Islamic principles
Al-Amanah Islamic Investment Bank of the Philippines
financial institutions that provide specialized financial services but do not hold a banking license. They cannot accept traditional deposits like banks but play a crucial role in the financial system by offering credit, investment, and insurance services.
Non-banks
Companies that provide financial protection against specific risks (e.g., life, health, property).
F:
* Offer life, health, property, and casualty insurance
* Collect premiums and pay out claims
* Manage long-term investments for policyholders
Insurance Companies
Firms that engage in underwriting and selling securities to help businesses raise capital.
F:
* Underwrite new stocks and bonds
* Provide corporate advisory services
* Facilitate mergers, acquisitions, and public offerings
Investment Houses
Institutions that provide credit facilities for consumer and business needs without accepting public deposits.
F;
* Offer consumer loans (e.g., auto loans, personal loans)
* Provide business financing for equipment or capital
* Facilitate installment payment plans
Financing Companies
Businesses that offer secured loans where personal property is used as collateral.
F:
* Provide short-term loans secured by jewelry or electronics
* Offer remittance and money transfer services
* Sell unclaimed pawned items
Pawnshops
Entities that buy, sell, and trade stocks and other securities on behalf of clients.
F:
* Facilitate stock and bond trading for clients
* Offer investment advice and market analysis
* Manage portfolios for individual and corporate investors
Stock Dealers & Brokers
Member-based organizations providing financial services, mainly to their members.
F:
Offer savings and loan services to members
Provide credit for housing, education, and emergencies
Focus on community welfare and financial inclusion
Non-Stock Savings & Loan Associations (NSSLAs)
non-bank financial institutions operated by the Philippine government to provide social protection and financial security.
Government Non-Banks
A government agency providing social security benefits to public sector employees.
F:
* Offer retirement, disability, and life insurance benefits
* Provide housing and emergency loans for government workers
* Manage the pension fund for public employees
Government Service Insurance System (GSIS)
A government agency providing social security benefits to private sector employees and self-employed individuals.
F:
* Provide retirement, disability, maternity, and death benefits
* Offer salary and calamity loans
* Manage contributions for private employees’ social security
Social Security System (SSS)
A government agency that helps Filipinos save for housing and access affordable home financing.
F:
* Provide affordable housing loans
* Offer multi-purpose and calamity loans
* Manage members’ savings for housing needs
Home Development Mutual Fund (HDMF or Pag-IBIG Fund)
A government agency that protects bank depositors by insuring their deposits.
F:
* Insure bank deposits up to ₱500,000 per depositor
* Assist in the resolution of failing banks
* Protect public trust in the banking system
Philippine Deposit Insurance Corporation (PDIC)
