Monetary Policy and Central Banking — Review of the Philippine Financial System

Flashcards focusing on the key concepts from the lecture notes on Monetary Policy, Central Banking, and the Philippine financial system structure.

What is the Bangko Sentral ng Pilipinas (BSP) and what is its role?

The central bank of the Philippines. It provides directions in money, banking, and credit; supervises banks; and regulates non-bank financial institutions with quasi-banking functions.

What is BSP's main monetary policy goal?

To keep inflation low and stable to support balanced, sustainable economic growth.

What law codified BSP's mandate for financial stability and when was it signed?

Republic Act No. 11211, signed in February 2019, establishing financial stability as a core BSP mandate.

What are the three main supervisory targets of the BSP?

Banks; finance companies; and non-bank financial institutions with quasi-banking functions.

In BSP terms, what does currency management involve?

The BSP has the sole authority to issue the national currency.

What is the function of Payments and Settlements System Oversight?

To oversee payment systems to ensure secure and efficient fund transfers.

What are Monetary Operations in the BSP context?

The use of tools to manage the demand and supply of central bank money.

What does Systemic Risk Management entail for the BSP?

Promoting financial stability as a core mandate (RA 11211).

What does Inclusive Finance mean in BSP programs?

Programs and policies that advance financial inclusion, financial education, and consumer empowerment.

What is Indirect Finance?

Funds flow from lender-savers to borrower-savers via financial intermediaries (e.g., banks, NBFIs).

What is the structure of the Philippine financial system as per the notes?

Banking Institution; Bangko Sentral ng Pilipinas (BSP); Non-Bank Financial Institution; Government Banking Institutions; Private Non-Bank Financial Institution.

What are the major types of Private Banking Institutions?

Commercial Banks; Universal/Expanded Commercial Banks; Thrift Banks; Rural Banks.

What extra authority do Universal Banks have?

They can perform investment house functions in addition to traditional banking activities.

What characterizes Thrift Banks?

Savings and mortgage banks, private development banks, and stock savings and loan associations; generally smaller than commercial banks.

What are Rural Banks?

Banks established to promote the rural economy by providing credit to farmers, fishermen, small merchants, and rural residents.

Name two Government Banking Institutions and their primary roles.

Development Bank of the Philippines (DBP) — provides medium/long-term financing; LandBank of the Philippines — serves agricultural sectors and rural communities.

What are Government Non-Bank Financial Institutions?

Institutions such as Pag-IBIG, GSIS, SSS, PDIC, NHMFC, and PhilGuarantee.

What is PDIC?

Philippine Deposit Insurance Corporation; provides deposit insurance coverage for all bank deposits.

What is Pag-IBIG?

Home Development Mutual Fund (HDMF); a national savings program that provides housing finance to its members.

What is NHMFC?

National Home Mortgage Finance Corporation; government-owned entity that operates in the secondary mortgage market.

What is PhilGuarantee?

Philippine Guarantee Corporation; provides guarantee coverage for loans and projects, especially MSMEs and infrastructure.

What are Private Non-Bank Financial Institutions?

Private non-banking financial entities including insurers, investment houses (UITFs), securities dealers/brokers, pawnshops, and money changers/FX dealers.

What do Insurance Companies do?

Provide financial protection against risks; pool premiums and invest funds to pay out claims.

What are COL Financial and similar Investment Houses?

COL Financial and similar firms are investment houses / stock brokers that intermediates in capital markets.

What are UITFs (Unit Investment Trust Funds)?

Funds pooled from multiple investors to invest in a diversified portfolio of securities.

What do Securities Dealers/Brokers do?

Facilitate the buying and selling of securities (stocks, bonds) in the stock market.

What are Pawnshops?

Provide small, short-term loans to individuals, with personal property used as collateral.

What are Money Changers / Foreign Exchange Dealers?

Facilitate the exchange of one currency for another.