History and Functions of Money and Financial Systems

Flexible Exchange Rate

Value based on market confidence and demand.

Money

Widely accepted medium for goods and services.

Scarcity

Limited availability increases value of money.

Etymology of Money

Derived from Latin 'moneta' meaning coin.

Barter System

Direct trade of goods without standardized medium.

Indivisibility of Certain Goods

Some goods cannot be easily divided for trade.

Portability

Money should be easy to carry and transfer.

Commodity Money

Items with intrinsic value used as currency.

Acceptability

Money must be widely recognized as payment.

Regulatory Agencies

Oversee banking and financial market activities.

Money Markets

Provide short-term debt financing and investments.

Foreign Exchange Markets

Facilitate trading of foreign currencies.

Rural Bank

Banks serving provincial and suburban areas.

Development Bank of the Philippines

Focuses on agricultural and development projects.

Commercial Banks

Offer a wide range of financial functions.

Philippines Veterans Bank

Bank owned by WWII veterans and families.

Thrift Bank

Savings and mortgage banks for individuals.

Investment Companies

Raise funds by selling their own securities.

Social Security System

Provides benefits like pensions and disability.

Lending Investors

Provide funds to those unable to borrow.

Functions of Money

Facilitates transactions, measures value, stores wealth.

Unit of Account

Standard measure for comparing values of goods.

Standard of Deferred Payment

Method for settling future debts consistently.

Double Coincidence of Wants

Both parties must desire each other's goods.

Durability

Money must withstand physical wear and tear.

Lack of Standardized Value

Barter lacks common measure for value comparison.

Divisibility

Money must be divisible for smaller transactions.

Uniformity

Each unit of money must be identical.

Gold Exchange Standard

Currency value linked to gold reserves.

Bretton Woods Standard

Established fixed exchange rates post-World War II.

Coinage

First standardized coins minted by Lydians.

Paper Money

First issued by Tang Dynasty as 'jiaozi'.

Financial System

Institutions facilitating investment and fund acquisition.

Central Banks

Government banks managing national money supply.

Bangko Sentral ng Pilipinas

Philippines' central monetary authority established 1993.

Financial Markets

Platforms for trading assets like stocks and bonds.

Capital Markets

Financing through shares or debt instruments.

Governor of BSP

Chief executive officer of Bangko Sentral.

Eli M. Remolona

Current governor of Bangko Sentral ng Pilipinas (BSP).

Commodity Markets

Facilitate trading of physical goods.

BSP

Only institution authorized to print money.

Financial Institutions

Organizations that provide financial services.

Money Manager

Mediates between borrowers and investors.

Financial Instruments

Products traded in financial markets.

Price Stability

Maintaining consistent prices for goods and services.

Bank of all Banks

BSP serves as the central bank.

Financial Services

Services provided by financial institutions.

Conservator

Assigned to troubled banks to prevent losses.

Investment Houses

Underwrite and sell securities for corporations.

Insurance Companies

Provide risk distribution and long-term capital.

Financing Companies

Extend credit to consumers and businesses.

Philippine Deposit Insurance Corp.

Insures bank deposits up to P500,000.

Pawnshops

Lend money against personal property as security.

Fund Managers

Administer and manage property or money.

Trust Corporation

Acts as trustee for property and funds.