History

[edit]Pre-Spanish

Colonial Period

Trade among the early Filipinos and with traders from the neighboring islands was conducted through barter. The inconvenience of barter later led to the use of some objects as medium of exchange. These objects included piloncitos and gold barter rings. Piloncitos are small bead-like gold bits, and they are considered by the local numismatists as the earliest coin of the ancient Filipinos.
[edit]Spanish

Colonial Period

The Spaniards brought their coined money when they came in 1521 and the first European coin which reaches the Philippine Islands with Magellan's arrival was the teston or four-reales silver coin. The teston became the de facto unit of trade between Spaniards and Filipinos before the founding of Manila in 1574. The native name for the coin was salapi (Tagalog formoney).
[edit]Pre-Decimal Coinage

With the establishment of Manila, the Spanish introduced the silver Real de a ocho, already known across the Spanish Empire coloquially as the peso, which was divided into 8 Reales and further subdivided into 4 Quartos or 8 Octavos. The monetary situation in the Philippine Islands was chaotic due to the circulation of many types of coins, with differing purity and weights, coming from mints across the Spanish-speaking world. Spanish coins circulated freely with those from the newly independent Spanish colonies including reales fuertes, reales de velln, peseta columnaria, peseta sencilla, pesos de minas, tomines, ducados, maravedis among others. Value equivalents of the different monetary systems were usually difficult to comprehend and hindered trade and commerce.
[edit]Decimal Coinage

An attempt to remedy the monetary confusion was made in 1848, with the introduction of the decimal system in 1857 under the second Isabelline monetary system.[2] Overseeing the conversion was GovernorGeneral Fernndo Norzagaray y Escudero.

Conversion to the decimal system with the peso fuerte (Spanish for strong peso) as the unit of account solved the accounting problem, but did little to remedy the confusion of differing circulating coinage. Renewed calls for the Philippine Islands to have a proper mint and monetary system finally came to fruition in September 1857, when Queen Isabel II authorized the creation of the Casa de Moneda de Manila and purchase of required machinery. The mint was inaugurated on March 19, 1861. Despite the mintage of gold and silver coins, Mexican and South and Central American silver still circulated widely.
[edit]The Isabella Peso or Peso Fuerte

Main article: Philippine peso fuerte The Isabelline Peso, more formally known as the peso fuerte was a unit of account divided into 100 centimos equivalent to 8 reales fuertes or 80 reales de velln. Its introduction led to the Philippines' brief experiment with the gold standard, which would not again be attempted until the American Colonial Period. The Peso Fuerte was also a unit of exchange equivalent to 1.69 grams of gold, 0.875 fine (0.0476 XAU), equivalent to 2,934.31 modern pesos of as of 22 December 2010.[3] Coin production at the Casa de Moneda de Manila began in 1861 with gold coins (0.875 fine) of three denominations: 4 pesos, 2 pesos, and 1 peso. On March 5, 1862, Isabel II granted the mint permission to produce silver fractional coinage (0.900 fine) in denominations of 10, 20, and 50 centimos de peso. Minting of these coins started in 1864, with designs similar to the Spanish Silver Escudo.
[edit]The Alfonso Peso, the Spanish-Filipino Peso

A final attempt to standardize the currency in the Philippines was made by the Spanish government with the minting of a silver peso expressly for use in the colony and firmly reestablishing the silver standard as the Philippine monetary system. The coin, which was to be later known as the Spanish-Filipino peso, was minted in Madrid in 1897 and bore the bust of King Alfonso XIII. The specifications of the coin was 25 grams of silver .900 fine. This configuration was also used in the creation of

the Puerto Rican provincial peso in 1895 giving both coins the equivalency of 5 pesetas.[4] The new monetary standard finally established the Peso as 25 grams silver, 0.900 fine (0.7234 XAG), equivalent to 942.535 modern pesos of as of 22 December 2010.[5] The Spanish-Filipino peso remained in circulation and were legal tender in the islands until 1904, when the American authorities demonetized them in favor of the new US-Philippine peso.
[edit]Revolutionary

Period

Asserting its independence after the Philippine Declaration of Independence on June 12, 1898, the Repblica Filipina (Philippine Republic) under General Emilio Aguinaldo issued its own coins and paper currency backed by the countrys natural resources. The coins were the first to use the name centavo for the subdivision of the peso. The island of Panay also issued revolutionary coinage. After Aguinaldo's capture by American forces in Palanan, Isabela on March 23, 1901, the revolutionary peso ceased to exist.
[edit]American

Colonial Period

After the United States took control of the Philippines, the United States Congress passed the Philippine Coinage Act (March 3, 1903), established the unit of currency to be a theoretical gold peso (not coined) consisting of 12.9 grains of gold 0.900 fine (0.026875 XAU), equivalent to 2,933.07 modern pesos of as of 22 December 2010.[6] This unit was equivalent to exactly half the value of a U.S. dollar [7] and maintained its purchasing power until the opening day of the Central Bank of the Philippines in 1949. The act provided for the coinage and issuance of Philippine silver pesos substantially of the weight and fineness as the Mexican peso, which should be of the value of 50 cents gold and redeemable in gold at the insular treasury, and which was intended to be the sole circulating medium among the people. The act also provided for the coinage of subsidiary and minor coins and for the issuance of silver certificates in denominations of not less than 2 nor more than 10 pesos.

It also provided for the creation of a gold-standard fund to maintain the parity of the coins so authorized to be issued and authorized the insular government to issue temporary certificates of indebtedness bearing interest at a rate not to exceed 4 per cent per annum, payable not more than one year from date of issue, to an amount which should not at any one time exceed 10 millions of dollars or 20 millions of pesos. Volume III of the 1925 Administrative Code with Comments and Annotations by Gregorio S. Araneta, (Book II, Title VII, Chapter 41, Article II) 1611. Unit of monetary value in the Philippine Islands The unit of value in the Philippine Islands shall be the gold peso consisting of twelve and nine-tenths grains of gold, nine-tenths fine; two pesos gold shall be equal in weight, fineness, and value to the gold standard dollar of the United States. [Act of Cong., Mar. 2, 1903, sec 1; 2657-1770; 2776-1; 3058-1] 1612. Legal tender The Philippine silver peso and half peso, and gold coins of the United States at the value of one dollar for two pesos, shall be legal tender for all debts, public and private, unless otherwise specifically provided by contract. Philippine subsidiary coins of twenty centavos and ten centavos shall be legal tender in amounts not exceeding twenty pesos. Philippine minor coins of nickel and copper shall be legal tender in amounts not exceeding two pesos. [Act of Cong., Jul 1, 1902, sec 79; Act of Cong., Mar. 2, 1903, secs 3, 5; 2657-1771; 2776-1; 3058-1] Shortly after the introduction of the Peso-dollar Parity Fund, a problem occurred which was paralled in the Straits Settlements. The price of silver rose so high that the Philippine Peso coins, and the new Straits dollar coins became less valuable than their actual silver content. In order to maintain the Peso-dollar Parity Fund, instead of allowing the exchange rate to float, the weight and fineness of the coins were later reduced

by Act No. 1564 of the Philippine Commission, enacted December 6, 1906. The following legal provision proclaims: 1613. Weight and fineness of Philippine coins The lawful weight and finess of Philippine coins shall be as follows, and all coins hereafter coined shall be minted in accordance therewith: The peso shall be equal to one hundred centavos and shall contain twenty grams of silver eight hundred thousandths fine. The fifty-centavo piece shall contain ten grams of silver seven hundred and fifty thousandths fine. The twenty-centavo piece shall contain fourgrams of silver seven hundred and fifty thousandths fine. The ten-centavo piece shall contain two grams of silver seven hundred and fifty thousandths fine. The alloy of the above-mentioned silver coins shall be copper. The five centavo piece shall cointain four grams and eighty-seven centigrams of an alloy composed of seventy-five per cent of copper and twenty-five per cent of nickel. The one centavo piece shall cointain five grams and one hundred and eighty-four milligrams of an alloy composed of ninety-five per cent of copper and five per cent of tin and zinc.

1945 ten-centavo coin, minted in Denver, Colorado, showing the coat of arms of the Philippine Commonwealth

[edit]World

War II

In 1942, the Japanese occupiers introduced notes for use in the Philippines. Emergency circulating notes (also termed "guerrilla pesos") were also issued by banks and local governments, using crude inks and materials, which were redeemable in silver pesos after the end of the war. The Japanese-sponsored Second Philippine Republic under Jos P. Laurel outlawed possession of guerrilla currency and declared a monopoly on the issuance of money and anyone found to possess guerrilla notes could be arrested. Because of the fiat nature of the currency, the Philippine economy felt the effects of hyperinflation. Combined U.S. and Philippine Commonwealth military forces including recognized guerrilla units continued printing Philippine pesos, so that, from October 1944 to September 1945, all earlier issues except for the emergency guerrilla notes were considered illegal and were no longer legal tender.
[edit]Independence

Republic Act No. 265 created the Central Bank of the Philippines (CBP, now the Bangko Sentral ng Pilipinas) on January 3, 1949, in which was vested the power of administering the banking & credit system of the country.[8] Under the act, all powers in the printing and mintage of

Philippine currency was vested in the CBP, taking away the rights of the banks such as Bank of the Philippine Islands and the Philippine National Bank to issue currency. In a repeat of Japanese wartime monetary policy, the government defaulted on its promises to redeem its banknotes in silver or gold coin while promising to maintain the two-to-one peso to dollar parity. This decision, compounded with the deliberate overprinting of fiat banknotes, resulted in the peso dropping in value by almost 300% against the US dollar within the first three hours of opening day. The government effort to maintain the peg devastated the gold, silver and dollar reserves of the country. By 1964, the bullion value of the old silver pesos was worth almost twelve times their face value and were being hoarded by Filipinos rather than being surrendered to the government at face value. In desperation, thenPresident Diosdado Macapagal demonetized the old silver coins and floated the currency. The peso has been a floating currency ever since, which means that the currency is a physical representation of the domestic debt and whose value directly tied to people's perception of the stability of the current regime and its ability to repay the debt.

From the opening of the Bangko Sentral ng Pilipinas in 1949, successive governments have continued to devalue the currency in order to lower the accumulated domestic debt in real terms, which in December 2005 reached 4.02 trillion. Many Filipinos perceive the peso's value in relation to the US dollar rather than consider the currency's purchasing power and thus tend to blame whatever regime is in power for the worsening exchange rate. In 1967, the language used on all coins and banknotes was changed to Tagalog. As a consequence, the wordings of the currency changed from centavo and peso to sentimo and piso.
[edit]Current

economy

Based on the current price of gold, the Philippine peso has now lost 99.9328% of its original 1903-1949 value. As of December 22, 2010, it takes 2,933.07 modern pesos to equal the intrinsic purchasing power parity of the 1903-1949 Philippine Commonwealth peso, as per its legal definition: 12.9 grains of pure gold (or 0.026875 XAU).[9] As of 11 May 2010, the Philippine money supply (M1) totaled about 1.22 trillion.[10] As of 3 October 2010, the Philippine Peso traded at

43.63 per US$,[11] 60.17013 per EUR,[12]6.52119 per CNY.[13]

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[edit]Coins

Main article: Coins of the Philippine peso

Detail on a 5-piso coin, depictingEmilio Aguinaldo

In 1861, gold coins were issued for 1, 2 and 5 pesos. These were equal in gold content to the earlier Spanish coins of , 1 and 2 escudos. Silver coins were minted from 1864 in denominations of 10, 20 and 50 centimos de peso, with silver 1-peso coins issued in 1897. During the Revolutionary period, coins were issued in copper for 1 and 2 centavos and 2 centimos de peso.

In 1903, a new coinage was introduced. It consisted of bronze and 1 centavo, cupro-nickel 5 centavos and silver 10, 20 and 50 centavos and 1 peso. The silver coins were weight related to the peso which was minted in .900 fineness and contained 374.4 grains of silver. U.S. gold coins and and 1 peso coins were legal tender for any amount, with 10 and 20 centavos coins being legal tender up to 20 pesos and smaller coins up to 2 pesos. The sizes and finenesses of the silver coins were reduced in 1907, with the peso now a 20 gram coin minted in .750 silver. Production of the 1 peso coin ceased in 1912 and that of the 50 centavos in 1921. The American Government deemed it more economical and convenient to mint silver coins in the Philippines, hence, the re-opening of the Manila Mint in 1920, which produced coins until the Commonwealth period. In 1937, coin designs were changed to reflect the establishment of the Commonwealth. No coins were minted in the years 1942 and 1943 due to the Japanese occupation, but minting resumed in 1944, including production of 50 centavos coins. Due to the large number of coins issued between 1944 and 1947, coins were not minted again until 1958.

In 1958, a new, entirely base metal coinage was introduced, consisting of bronze 1 centavo, brass 5 centavos and nickel-brass 10, 25 and 50 centavos. In 1967, the coinage was altered to reflect the use of Filipino names for the currency units. 1-piso coins were introduced in 1972. In 1975, the "Ang Bagong Lipunan" series was introduced with the 5-piso coins included. Aluminium replaced bronze and cupro-nickel replaced nickel-brass that year. The Flora and Fauna series was introduced in 1983 which included 2-piso coins. The sizes of the coins were reduced in 1991, with production of 50-sentimo and 2-piso coins ceasing in 1994. The current series of coins was introduced in 1995, with 10-piso coins added in 2000. Denominations below 1 piso are still issued but are not in wide use. In December 2008 a Philippine Congress resolution called for the retirement and demonetization of all coins less than one peso.[14]
[edit]Banknotes

Main article: Banknotes of the Philippine peso In 1852, the Banco Espaol-Filipino de Isabel 2a issued notes for 10, 25 and 50 pesos fuertes. In 1896, the bank added 5 pesos fuertes notes. The treasury

issued notes for 1, 4 and 25 pesos fuertes in 1877. During the SpanishAmerican and PhilippineAmerican wars, 1 and 5 pesos notes were issued in the name of the Repblica Filipina. Between 1903 and 1918, silver certificates were issued, in denominations of 2, 5, 10, 20, 50, 100 and 500 pesos. These were replaced with Treasury Certificates, issued between 1918 and 1941 in denominations of 1, 2, 5, 10, 20, 50, 100 and 500 pesos. In 1904, the Banco Espaol-Filipino introduced notes in denominations of 5, 10, 25, 50, 100 and 200 pesos. In 1912, this bank changed its name to the Bank of the Philippine Islands(BPI), continuing to issue notes until 1933. The Philippine National Bank (PNB) issued notes in 1916 in denominations of 2, 5 and 10 pesos, with emergency notes issued in 1917 for 10, 20 and 50 centavos, 1, 5, 10 and 20 pesos. Between 1918 and 1937, the PNB issued notes in denominations of 1, 2, 5, 10, 20, 50 and 100 pesos. These notes were in circulation until 1947. The Japanese issued two series of notes. The first was issued in 1942 in denominations of 1, 5, 10 and 50 centavos, 1, 5 and 10 pesos. The

second, from 1943, was in denominations of 1, 5, 10, 100, 500 and 1000 pesos. In 1944, Treasury Certificates, featuring the word "Victory" printed on the reverse, were issued to replace all the earlier notes. These were in denominations of 1, 2, 5, 10, 20, 50, 100 and 500 pesos. In 1949, the Central Bank of the Philippines took over paper money issue. Its first notes were overprints on the Victory Treasury Certificates. These were followed in 1951 by regular issues in denominations of 5, 10, 20 and 50 centavos, 1, 2, 5, 10, 20, 50, 100, 200 and 500 pesos. The centavo notes (except for the 50-centavo note, which would be later known into the half-peso note) were discontinued in 1958 when the English Series coins were first minted. In 1967, the CBP adopted the Filipino language on its currency, using the name Bangko Sentral ng Pilipinas, and in 1969 introduced the "Pilipino Series" of notes in denominations of 1, 5, 10, 20, 50 and 100 piso. The "Ang Bagong Lipunan Series" was introduced in 1973 and included 2-peso notes. A radical change occurred in 1985, when the CBP issued the "New Design Series" with 500-piso notes introduced in 1987,

1000-peso notes (for the first time) in 1991 and 200-piso notes in 2002. Philippine banknotes are currently issued in the following denominations:

5 piso* 10 piso* 20 piso 50 piso 100 piso 200 piso 500 piso 1000 piso

(* No longer being printed, but still legal tender)

[edit]New

Design/BSP Banknote series Generation Currency

Main article: New Design series

[edit]New

In 2009 the Bangko Sentral ng Pilipinas announced that has launched a massive redesign for current banknotes and coins to further enhance security features and improve durability.[15]The members of the numismatic committee include Bangko Sentral Deputy Governor Diwa Guinigundo and Dr. Ambeth Ocampo Chairman of the National Historical Institute. The new banknote designs feature famous Filipinos and iconic natural wonders. Philippine national symbols will be depicted on coins. The BSP started releasing the initial batch of new banknotes in December 2010 while

new coins will be introduced beginning 2012. Current banknotes will remain legal tender for at least three years exactly in December 2013.
[edit]Recent

issues
banknotes

[edit]"Arrovo"

In 2005, several 100-peso notes with President Gloria Macapagal-Arroyo's surname misspelled as "Arrovo" were in circulation. Days after this was first found out, the BSP ordered an investigation.[16]
[edit]Fraud

problem with the 1 peso coin

By August 2006, it became publicly known that the 1 peso coin has the same size as the 1 United Arab Emirates dirham coin.[17] As of 2010, 1 peso is only worth 7 fils (0.07 dirham), leading to vending machine fraud in the U.A.E. Similar frauds have also occurred in the US, as the 1 peso coin is roughly the same size as the Quarter but as of 2010 is worth only about 2 U.S. cents. Newer digital parking meters are not affected by the fraud.

A 1 United Arab Emirates dirham coin.

A U.S. Quarter (25 cents).

[edit]New

Generation series errors

Several, albeit disputable, errors have been discovered on banknotes of the New Generation series and have become the subject of ridicule in social networking sites. Among these are the exclusion of Batanes from the Philippine map on the reverse of all denominations, the mislocation of the Puerto Princesa Subterranean Underground River on the reverse of the 500-peso bill and the Tubbataha Reef on the 1000-peso bill, and the incorrect coloring on the beak and feathers of the blue-naped parrot on the 500-peso bill.[18][19] The scientific names of the animals featured on the reverse sides of all banknotes were incorrectly rendered as well,[20] but these were eventually realized to be due to the color limitations of intaglio printing.[21]
[edit]