Professional Documents
Culture Documents
A:
The State shall maintain a central monetary authority that
shall function and operate as an independent and
accountable body corporate in the discharge of its
mandated responsibilities concerning money, banking and
credit.
A:
It is established as an independent central monetary authority.
Its capital shall be P50,000,000,000, to be fully subscribed by
the Philippine Government.
The P10,000,000,000 of the capital shall be fully paid for by
the Government upon the effectivity of this Act and the balance
to be paid for within a period of 2 years from the effectivity of
this Act in such manner and form as the Government, through the
Secretary of Finance and the Secretary of Budget and
Management, may thereafter determine. (Sec. 2)
Q: What are the responsibilities of BSP:
1. To provide policy directions in the areas of
money, banking, and credit
2. To supervise bank operations
3. To regulate the operations of finance
companies and nonbank financial institutions
performing quasibanking functions, and similar
institutions. (Sec. 3)
Q: What are the primary objectives of BSP
A:
1. To maintain price stability conducive to a
balanced and sustainable growth of the
economy.
2. To promote and maintain monetary stability
and the convertibility of the peso. (Sec. 3)
Q: What are the function of BSP
1. Issuer of currency. (Sec. 4960)
2. Custodian of reserves. (Secs. 6466, 94, 103)
3. Clearing channel or house; especially where the PCHC does not operate .(Sec. 102)
4. Banker of the government the BSP shall be the official depository of the Government and shall
represent it in all monetary fund dealings (Secs. 110 116)
5. Financial advisor of the government (Secs. 123124) Under Article VII, Sec. 20 of the 1987
Constitution, the President may contract or guarantee foreign loans but with the prior concurrence of the
Monetary Board.
6. Source of credit (Secs. 6163, 8189,
109)
Supervisor of the banking system (Sec.
25
shall include the power to:
a. Examine, extending to enterprises wholly or majorityowned or controlled by the bank
(Sec. 7, RA 8791); this power may not be restrained by a writ of injunction unless there is
convincing proof that the action of the BSP is aplainly arbitrary (Sec. 25)
b. Place a bank under receivership or liquidation (Sec. 30)
c. Initiate criminal prosecution of erring officers of banks
8. Government agent (Secs. 117122)D
Q: What is the Monetary Board?
A: The body through which the
powers and functions of the
Bangko Sentral are exercised. (Sec
6)
Q: What are the powers and functions of the Monetary Board?
A:
Issue rules and regulations it considers necessary for the effective
discharge of the responsibilities and exercise of its powers
Direct the management, operations, and administration of the Bangko
Sentral, reorganize its personnel, and issue such rules and regulations as
it may deem necessary or convenient for this purpose
A:
To take charge of the assets, liabilities, and the management thereof
Recognize the management
collect all monies and debts due said bank
Exercise all powers necessary to restore its viability with the power to
overrule or revoke the actions of the previous management and board
of directors of the bank or quasibank (First Philippine International
Bank vs. CA, G.R. No. 115849, Jan. 24, 1996).
A:
Cash Flow test Inability to pay liabilities as they become due in the
ordinary course of business (Sec. 30 [a] NCBA).
Balance sheet test Insufficiency of realizable assets to meet its
liabilities (Sec 30 [b] NCBA).
Inability to continue business without involving probable losses to its
depositors and creditors (Sec 30 [c] NCBA).
willful violation of a cease and desist order under Section 37 that has
become final, involving acts or transactions which amount to fraud or a
dissipation of the assets (Sec 30 [d] NCBA).
Notification to the BSP or public announcement of a bank holiday (Sec
53, GBL).
Suspension of payment of its deposit liabilities continuosly for more
than 30 days (Sec 53, GBL).
Persisting in conducting its business in an unsafe or unsound manner (Sec
56, GBL).
Q: What is the close nowhear later doctrine?
A: The law does not contemplate prior notice and hearing
before the bank may be directed to stop operations and
placed under receivership. The purpose is to prevent
unwarranted dissipation of the banks assets and as a valid
exercise of police power to protect the depositors, creditors,
stockholders and the general public. (Central Bank of the
Philippines v. CA, G.R. No. 76118 Mar. 30, 1993)
Q: Can the closure and liquidation of a bank, which is considered
an exercise of police power, be the subject of judicial inquiry?
A: Yes. While the closure and liquidation of a bank may be
considered an exercise of police power, the validity of such exercise
of police power is subject to judicial inquiry and could be set aside if
it is either capricious, discriminatory, whimsical, arbitrary, unjust or a
denial or due process and equal protection clauses of the Constitution
(Central Bank v. CA, G.R. No. L5003132, July 27, 1981).
Q: Upon maturity of the time deposit, the bank failed to remit. By
reason of punitive action taken by Central Bank, the bank has
been prevented from performing banking operations. Is the bank
still obligated to pay the time deposits despite the fact that its
operations were suspended by the Central Bank?
A: The suspension of operations of a bank cannot excuse
noncompliance with the obligation to remit the time deposits of
depositors which matured before the banks closure. (Overseas Bank
of Manila v. CA, G.R. No. 45886, Apr. 19, 1989)
Q: Who is a receiver?
A: One appointed if bank is already
insolvent which means that its liabilities
are greater than its assets.
Q: What are the duties of a receiver?
A:
The receiver shall immediately gather and take charge of all the
assets and liabilities of the institution.
Administer the same for the benefit of the creditors, and exercise the
general powers of a receiver under the Revised Rules of Court
A:
Notes and coins called in for replacement shall remain legal
tender for a period of one year from the date of call.
After that period, they shall cease to be legal tender during the
following year or for such longer period as MB may determine.
After the expiration of this latter period, the notes and coins
which have not been exchanged shall cease to be a liability of
BSP and shall be demonetized. (Sec. 57)
Q: What is the period of
replacement?
A: 1. Notes for any series or
denomination More than 5 years old
2. Coins More than 10 years old
Q: How is the Power to determine Rates of Exchange
exercised?
A:
The Monetary Board shall determine the rates at which the
Bangko Sentral shall buy and sell spot exchange, and shall
establish deviation limits from the effective exchange rate or
rates as it may deem proper.
The Monetary Board shall similarly determine the rates for other
types of foreign exchange transactions by the Bangko Sentral,
including purchases and sales of foreign notes and coins, but the
margins between the effective exchange rates and the rates thus
established may not exceed the corresponding margins for spot
exchange transactions by more than the additional costs or
expenses involved in each type of transactions.
Q: What actions does the Bangko Sentral take when international
stability of Peso is threatened?
A: Whenever the international reserve of the Bangko Sentral falls to
a level which the Monetary Board considers inadequate to meet the
prospective demands on the Bangko Sentral for foreign currencies, or
whenever the international reserve appears to be in imminent danger
of falling to such a level, or whenever the international reserve is
falling as a result of payments or remittances abroad which , in the
opinion of the Monetary Board, are contrary to the national welfare,
the Monetary Board shall:
1. Take such remedial measures as are appropriate and within the
powers granted to the Monetary Board, and the Bangko Sentral
2. Submit to the President of the Philippines and the Congress, and
make public a detailed report which shall includes, as a minimum, a
description and analysis of:
a. The nature and causes of the existing or imminent decline;
b. The remedial measures already taken or to be taken by the
Monetary Board
A:
Temporarily suspending and restricting sales of foreign
exchange by the Bangko Sentral;
Subjecting all transactions in gold and foreign exchange to
license by the Bangko Sentral;
Requiring that any foreign exchange thereafter obtained by
any person residing or entity operating in the Philippines be
delivered to the Bangko Sentral or to any bank or agent
designated by the Bangko Sentral for the purpose, at the
effective exchange rate or rates (Sec. 72)