Money, Central Banking, and the Philippine Financial System

Vocabulary practice flashcards covering fundamental concepts in money, banking, financial market structures, central bank mandates (BSP), regulatory frameworks, and elements of the Philippine financial system.

Money (Traditional Economics Definition)

Anything that is generally accepted as payment for goods and services or as repayment for debts.

Money (as a Financial Asset)

A claim against income or wealth of a business firm, household, or unit of government, usually represented by a certificate, receipt, or other legal document.

Barter System

A system in which goods or services are directly exchanged with other goods or services without the use of money.

RA No. 265 of 1948

The original charter that established the Central Bank of the Philippines (CBP) primarily to promote a rising level of production, employment, and real income.

PD No. 72

A presidential decree that focused the CBP's objectives on maintaining internal and external monetary stability rather than on its developmental functions.

RA No. 7653

The New Central Bank Act (effective 3 July 1993) that restructured the CBP to create the Bangko Sentral ng Pilipinas (BSP) with the primary mandate to promote price stability conducive to balanced and sustainable economic growth.

Monetary Board (MB)

The highest monetary policy-making body in the Philippines, composed of seven (7) members appointed by the President of the Philippines with a fixed term of six (6) years each (except the Government representative), chaired by the BSP Governor.

Provisional Advances to NG (Section 89 of RA No. 7653)

Financial assistance provided by the BSP to the National Government to finance annual appropriations, which shall not exceed 20 percent of NG's average annual income for the last three fiscal years and must be repaid within three months (extendible by another three months).

Financial System

A network of financial institutions, markets, instruments, and regulations that enables the efficient exchange and distribution of money between lenders/investors and borrowers.

Currency

A form of legal tender issued by a government and used as a means of exchange for goods, services, investments, and other valuable assets.

Financial Institutions

Middlemen at the heart of the financial system that provide financial services enabling individuals and organizations to save, invest, and borrow.

Financial Markets

Regulated venues or platforms where lenders and borrowers trade financial assets such as stocks, bonds, derivatives, and commodities.

Financial Instruments

Tradable monetary contracts, including money market securities, debt securities (bonds), equities (stocks), derivatives, and foreign exchange.

Financial Services

Services provided by banks, insurance providers, and investment banks that allow investors to manage assets and obtain protection against risk.

Stock Exchange

A financial market where public company ownership shares are traded, allowing investors to earn profits based on stock performance.

Bond or Debt Market

A market where governments and businesses issue debt securities to raise capital, promising to repay the principal and interest within a specified timeframe.

Commodities Market

A market where merchants and investors buy and sell natural resources or raw products such as corn, oil, meat, and gold.

Derivatives Market

A market for trading financial contracts whose value is derived from the market price of an underlying traded asset.

Money Market

A market segment dealing in short-term financial investments and transactions with maturities of up to one year.

Capital Market

A market segment where financial instruments with medium- to long-term maturities are traded.

Primary Market

The market where a company first offers new securities to the public, such as through an Initial Public Offering (IPO) or Additional Public Offering (APO).

Secondary Market

The exchange market where previously issued financial securities and stocks are traded among investors.

Cash Market

A market characterized by real-time settlement of transactions, requiring full payment from investors at the time of trade.

Futures Market

A market where delivery or final settlement of a security or commodity occurs at a future specified date, typically using cash settlements.

Exchange-Traded Market

A centralized trading system that operates under pre-established and standardized rules.

Over-the-Counter Market

A market framework where transactions and trades are negotiated directly between individual buyers and sellers without a central exchange.

Depository Institutions

Financial entities that accept and hold monetary deposits from the public, including commercial banks, credit unions, savings and loan associations, and mutual savings banks.

Non-depository Institutions

Financial organizations that do not accept traditional deposits, such as insurance companies, pension/provident funds, finance companies, mutual funds, and investment banks.

Global Financial Crisis of 2008-2009

Also known as 'The Great Recession', a major global financial downturn triggered by a housing market bubble and unsustainable mortgage lending practices.

Supervisory Policy and Research Department (SPRD)

A department created by the BSP responsible for receiving and processing applications to establish domestic and foreign banks in the Philippines.

Circular No. 854

A BSP circular detailing the minimum capitalization requirements for establishing different bank categories in the Philippines.

Universal Banks Capitalization Requirement

Minimum capital requirement set by BSP ranging from 3 billion to 20 billion pesos, depending on office type and number of branches.

Commercial Banks Capitalization Requirement

Minimum capital requirement set by BSP ranging from 2 billion to 15 billion pesos, depending on office type and number of branches.

Thrift Banks Capitalization Requirement

Minimum capital requirement set by BSP ranging from 500 million to 2 billion pesos, depending on office type and number of branches.

Rural and Cooperative Banks Capitalization Requirement

Minimum capital requirement set by BSP ranging from 50 million to 200 million pesos, depending on office type and number of branches.

MORB and MORNFI

Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-Banking Financial Institutions (MORNFI), issued by the Monetary Board to implement RA No. 8791 (The General Banking Law of 2000).

Quasi-Banking Functions

The borrowing of financial resources from the public through issuing, endorsing, or accepting debt instruments and deposit substitutes for relending or purchasing receivables.

Elements of the Philippine Financial System

The core structure comprising Financial Institutions, Financial Instruments, and Financial Markets operating to serve finance industry participants.

Functions of the Philippine Financial System

Key duties including producing ex-ante investment information, monitoring investments, facilitating risk management, mobilizing savings, and easing goods/services exchange.

Functions, Evolution, and Monetary Board Roles

A composite overview detailing the 12 functions of money, 5 stages of money evolution, and 6 primary roles of the Monetary Board.

Qualities of Good Money & Barriers of Barter System

A comparison listing essential attributes of functional money alongside key limitations inherent in barter exchange.

Universal and Commercial Bank Ranking by Total Assets

A financial ranking table of commercial and universal banks in the Philippines based on total asset value as of 31 March 2026.