Biala, Jenel R.

May 08, 2017

CRIMIN VI (MWF 1:00-3:00) SEC. B

History of Banko Sentral ng Pilipinas

The Bangko Sentral ng Pilipinas (lit.Central Bank of the Philippines; commonly

abbreviated as BSP in both Filipino and English) is the central bank of the Philippines. It
was established on July 3, 1993, pursuant to the provision of Republic Act 7653 or the
New Central Bank Act of 1993.

American era and World War II

In 1900, the First Philippine Commission passed Act No. 52, which placed all banks
under the Bureau of the Treasury and authorizing the Insular Treasurer to supervise and
examine banks and all banking activity. In 1929, the Department of Finance, through the
Bureau of Banking, took over bank supervision.

By 1933, a group of Filipinos had conceptualised a central bank for the Philippine
Islands. It came up with the rudiments of a bill for the establishment of a central bank
after a careful study of the economic provisions of the HareHawesCutting Act, which
would grant Philippine independence after 12 years, but reserving military and naval
bases for the United States and imposing tariffs and quotas on Philippine exports.
However, the HareHawesCutting Act would be rejected by the Senate of the
Philippines at the urging of Commonwealth President Manuel L. Quezon. This Senate
then advocated a new bill that won United States President Franklin D. Roosevelt's
support; this would be the TydingsMcDuffie Act, which would grant Philippine
independence on July 4, 1946.

Under the Commonwealth, discussions continued regarding the idea of a Philippine

central bank that would promote price stability and economic growth. The country's
monetary system then was administered by the Department of Finance and the National
Treasury, and the Philippine peso was on the exchange standard using the United
States dollar, which was backed by 100 percent gold reserve, as the standard currency.

As required by the TydingsMcDuffie Act, the National Assembly of the Philippines in

1939 passed a law establishing a central bank. As it was a monetary law, it required the
approval of the President of the United States; Franklin D. Roosevelt did not give his. A
second law was passed in 1944 under the Japanese-controlled Second Republic during
the Second World War, but the 1945 arrival of American liberation forces, aided by
Philippine Commonwealth troops and recognised guerrillas, aborted its implementation.

Third Republic and Martial Law

Shortly after President Manuel Roxas assumed office in 1946, he instructed then-
Finance Secretary Miguel Cuaderno, Sr. to draw up a charter for a central bank.The
establishment of a monetary authority became imperative a year later as a result of the
findings of the Joint Philippine-American Finance Commission chaired by Cuaderno.
The Commission, which studied Philippine financial, monetary, and fiscal problems in
1947, recommended a shift from the dollar exchange standard to a managed currency
system. A central bank was necessary to implement the proposed shift to the new
system.

Roxas then created the Central Bank Council to prepare the charter of a proposed
monetary authority. It was submitted to Congress in February 1948. By June of the
same year, the newly proclaimed President Elpidio Quirino, who succeeded President
Roxas, affixed his signature on Republic Act (RA) No. 265, the Central Bank Act of
1948.On January 3, 1949, the Central Bank of the Philippines was formally inaugurated
with Miguel Cuaderno, Sr. as the first governor. The main duties and responsibilities of
the Central Bank were to promote economic development and maintain internal and
external monetary stability.

Over the years, changes were introduced to make the charter more responsive to the
needs of the economy. On November 29, 1972, President Ferdinand Marcos'
Presidential Decree No. 72 amended Republic Act No. 265, emphasizing the
maintenance of domestic and international monetary stability as the primary objective of
the Central Bank. The Bank's authority was also expanded to include regulation of the
entire financial system of the Philippines and not just supervision of the banking system.
In 1981, RA 265, as amended, was further improved to strengthen the financial
system,among the changes was the increase in the capitalization of the Central Bank
from Php10 million to Php 10 billion.

In the 1973 Constitution, the interim Batasang Pambansa (National Assembly) was
mandated to establish an independent central monetary authority. Presidential Decree
No. 1801 designated the Central Bank of the Philippines as the central monetary
authority (CMA). Years later, the 1987 Constitution adopted the CMA provisions from the
1973 Constitution that were aimed essentially at establishing an independent monetary
authority through increased capitalization and greater private sector representation in
the Monetary Board.

Present

In accordance with a provision in the 1987 Constitution, President Fidel V. Ramos

signed Republic Act No. 7653, otherwise known as the New Central Bank Act, into law
on June 14, 1993. The law provides for the establishment of an independent monetary
authority to be known as the Bangko Sentral ng Pilipinas, its primary objective being the
maintenance of price stability. This objective was only implied in the old Central Bank
charter. The law also gives the Bangko Sentral fiscal and administrative autonomy
which the old Central Bank did not have. On July 3, 1993, the New Central Bank Act
took effect.

BSP Branch in Zamboanga City.

On the evening of September 26, 2012, a Wednesday, the BSP website was hacked by
a group named Anonymous Philippines in a protest against the recently passed
Cybercrime Prevention Act of 2012.The website was promptly restored in the early
hours of the following day.

On April 23, 2013, The Asian Banker named the BSP as the Best Macroeconomic
Regulator in the Asia-Pacific Region for 2013 in The Asian Banker Leadership
Achievement Awards in Jakarta, Indonesia. The BSP was cited as a good, strong, and
fair-minded regulator. About a month later, the BSP was given the country award by the
Child and Youth Finance International in its 2013 International Summit in Istanbul,
Turkey, in recognition of its initiative to integrate financial education in the Philippine
elementary school curriculum.
Process of making money in the Philippines