BSP FUNCTIONS, ROLES AND SOURCES OF FUNDS

BSP FUNCTIONS

As prescribed by the New Central Bank Act, the main functions of the Bangko Sentral are:

1. Liquidity management, by formulating and implementing monetary policy aimed at influencing

money supply, consistent with its primary objective to maintain price stability,

2. Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins
issued by the BSP are fully guaranteed by the Government and are considered legal tender for all
private and public debts,

3. Lender of last resort, by extending discounts, loans and advances to banking institutions
for liquidity purposes,

4. Financial supervision, by supervising banks and exercising regulatory powers over non-bank
institutions performing quasi-banking functions,

5. Management of foreign currency reserves, by maintaining sufficient international reserves to

meet any foreseeable net demands for foreign currencies in order to preserve the international
stability and convertibility of the Philippine peso,

6. Determination of exchange rate policy, by determining the exchange rate policy of the Philippines.
Currently, the BSP adheres to a market-oriented foreign exchange rate policy, and

7. Other Activities. Being the banker, financial advisor and official depository of the Government, its
political subdivisions and instrumentalities and GOCCs.

BSP ROLES

 Responsible for price stability through the conduct of monetary policy.

 Responsible for financial stability through banking supervision and regulation.
 Responsible for Efficient Payments and Settlement System
o BSP is the owner and operator of the Philippine Payments and Settlements System
(PhilPaSS), a real-time gross settlement system where settlement is done thru the member-
bank’s demand deposit account maintained by the BSP.
SOURCES OF FUNDS

The Domestic Economy’s Savings

 The non-financial corporations sector savings

owing to the sector’s profitable operations and
expansion activities.
 The general government as a result of tax
revenue collections of the National Government
(NG) and local government units (LGUs).
 The household sector’s saving.
 The financial corporations due to the operating
surplus and net income of universal/commercial
banks (UKBs) and the Bangko Sentral ng
Pilipinas (BSP), respectively.

The Domestic Economy’s Real Investments

 Non-financial corporations sector

 General government sector
 Household sector
 Financial corporations sector

The Domestic Economy’s Net Borrowing from the

Rest of the World

 Financial Corporations Sector

 Non-Financial Corporations Sector
 Household Sector
 General Government Sector