MONETARY TOOLS OF

THE BANGKO SENTRAL

NG PILIPINAS
.Open Market Operations.

These consist of buying and selling of
government bonds.These activities are
undertaken to accomplish the objectives
of the national monetary policy

.RESERVE REQUIREMENTS.

THE IMPOSITIONS OF RESERVE REQUIREMENTS ARE
MAINLY FOR THE PROTECTION OF THE DEPOSITORS,THAT
IS, TO ASSURE THE INDIVIDUAL BANKS WILL NOT
ATTEMPT TO EXTEND CREDIT BEYOND THEIR CAPACITY IF
THERE IS AN EXCESSIVE WITHDRAWAL.

THE DISCOUNT RATE .

ONE OF THE FUNCTIONS OF THE BSP IS TO ACT
AS THE LENDER OF LAST RESORT .BANKS
NEEDING RESERVES CAN BORROW FROM THE
BSP.THE INTEREST RATE THAT THE BSP
CHARGES ON THESE LOANS IS CALLED THE
DISCOUNT RATE.

IT REFERS TO THE ABILITY OF THE BSP TO
PERSUADE BANKS TO PURSUE CERTAIN
ACTIONS WITHOUT COERCION.
.BUYING AND SELLING OF FOREIGN
EXCHANGE.


THE BSP MAY BUY AND SELL FOREIGN EXCHANGE AT ALL TIMES TO
MAINTAIN THE INTERNATIONAL STABILITY AND CONVERTIBILITY OF THE
PHILIPPINE PESO TO PROMOTE THE DOMESTIC INVESTMENT OF BANK
RESOURCES.


.SELECTIVE CREDIT .THE BSP WILL ENSURE THAT THE SUPPLY AVAILABILITY
AND COST OF MONEY SHALL ACCORD THE NEEDS OF THE PHILIPPINE
ECONOMY AND THAT CREDIT WILL NOT BE GRANTED FOR SPECULATIVE
PURPOSES THAT DO NIT CONFORM TO THE NATIONAL INTEREST.

FISCAL POLICY
Refers to the government actions that affect
total government spending activities,tax rates
or tax revenues, or the government budget
deficit. It is an instrument which can push the
economy towards equilibrium,when there are
the destblizing elements operating in the
economy.
TWO TYPES
OF
FISCAL POLICY
Automatic Stabilizers-

are government spending or taxation actions that take
place without any deliberate government control and that
tend automatically dampen the business cycle.


Examples :Personal income tax collections fall during
recessions as wages drop and people lose their jobs .Thus,
during recessions ,government spending automatically
rises and tax collections fall. While if the economy is in full
or near full employment ,government spending falls and
tax collections rise to avoid inflation.

Discretionary fiscal policies

-are government spending and taxation actions
that have been deliberately taken to achieve
specified macroeconomics goals.

Example : If the economy is headed to a
recession,the government can make a desicin to
cut taxes to maintain purchasing power
THREE COMPONENTS OF FISCAL POLICY


.Taxation
.Government Borrowing .
.Government Spending


THREE MAJOR FUNCTIONS OF FISCAL
POLICY
.Allocation Function.
-It is the process by which total resources are divided between
private and social goods and by which the mix of social good is
chosen.
.Distribution Function.
-Adjustment of income and wealth to assure cnformance with
what society considers as fair or justdistribution
.Stabilization Function .
-The use of budget policy to maintain high employment ,price
level stability ,and economic growth.

*^_^*THANK YOU VERY
MUCH!!!!!!!!!!!!!!!!!!!!!!!!

PREPARED BY:
SARAH LUCIO*^_^*