History and Nature of Central Bank

Central bank

• national bank, reserve bank, or monetary authority that manages the currency and monetary policy of a country or monetary union

• financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. In modern economies, this is usually responsible for the formulation of monetary policy and regulation of member banks

• national bank that provides financial and banking services for its country’s government and commercial banking system, as well as implementing the government’s monetary policy and issuing currency

duties of central banks

• control and manipulate the national money supply

• regulate member banks through capital requirements, reserve requirements, and deposit guarantees

• also acts as an emergency lender to distressed commercial banks and other institutions, and sometimes even a government

• monetary policy

• financial stability

• reserve management

• banking supervision

• payments system

• coins and notes issuance

Bank of England

the model of most central banks in the world

1694

Sweden’s Riskbank

first ever central bank

1668

start of 20th century

approx. 2/3 sovereign states did not have a central bank

1720-1721

Banque Royale

1767

Caisse d’Escompte

1769

Russian Assignation Bank

1782

Bank of Spain

1791

First Bank of US

1800

Banque de France

1816-1836

second bank of US

1900

Act No. 52 was passed by First Philippine Commission

Act No. 52

placed all banks under the Bureau of Treasury

1939

the Bureau of Banking under the Dept. of Finance took over the task of banking supervision

1939

a bill establishing a central bank was drafted by Secretary of Finance Manuel Roxas and approved by the Philippine Legislature

a joint Philippine-American Finance Commission was created to study the Philippine currency and banking system

1946

the charter of the Central Bank of Guatemala was chosen as the model of the proposed central bank charter

Aug 1947

A Central Bank Council was formed to review the Commission’s report and prepare the necessary legislation for implementation

Feb 1948

President Manuel Roxas submitted to Congress a bill “Establishing the Central Bank of the Philippines”

June 15, 1948

Republic Act No. 265 (The Central Bank Act) was signed by President Elpidio Quirino

January 3, 1949

The Cenrtal Bank Act of the Philippines (CBP) was inaugurated and formalled opened with Hon. Miguel Cuaderno, Sr. as the first governor

Nov. 29, 1972

PD No. 72 emphasized the maintenance of domestic and international monetary stability as primary objective of CBP. Moreover, CBP’s authority was expanded to include not only the supervision of the banking system but also the regulation of the entire financial system

Jan. 1981

PD No. 1771 to improve and strengthen the financial system, among which was the increase in the capitalization of the CBP from P10 Million to P10 billion

1986

Executive Order No. 16 amended the Monetary Board membership to promote greater harmony and coordination of government monetary and fiscal policies

July 3, 1993

Republic Act No. 7653 was passed establishing Bangko Sentral ng Pilipinas, replacing CBP

Feb. 14, 2019

Republic Act No. 11211 was passed amending RA No. 7653