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83 Cards in this Set
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It consist institutional units and markets that interact for the purpose of mobilizing funds from lenders to borrower |
Financial system |
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SSU |
surplus spending unit |
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DDU |
deficit spending unit |
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A term used un finance to describe the system that allows money to go between savers and borrowers |
Financial system |
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GSIS |
Government Security Insurance System |
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Evidence of ownership |
Stocks |
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Evidence of obligations |
Bonds |
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The borrower is unknown to the savers or the surplus spending unit |
Indirect finance |
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You know already who is your borrowers |
Direct finance |
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It can be use as exchange of goods and services |
Money |
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Institutions that channel funds from individuals with surplus funds to those desiring funds |
Banking and financial institutions |
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Accept deposits and make loan |
Banks |
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A formal obligation that entitles one party to receive payments and or share of assets from another party |
Financial instruments |
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Entitled to this in bonds |
Holders |
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Entitled to receive dividends |
Stocks |
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Share in the net income of the company |
Dividends |
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Are mechanism that allows people to easily buy and sell financial securities |
Financial market |
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A debt security that promises to make specified rate of interest payments periodically for a specified period of time |
Bond market |
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A stock represents a share of ownership of a corporation or a claim on a firm's earning or assets |
Stock market |
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Where funds are converted from one currency into another |
Foreign exchange market |
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A government body that regulates financial institutions, controls the supply of money and credit in the economy, handles government finances and serves as the bank to commercial bank |
Central bank |
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2 types of policy |
Contractionary Fiscal |
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Decrease of money supply/ lower ssu |
Contractionary |
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Increase of money supply/higher ssu |
Expansionary |
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Involves decision about government spending and taxation |
Fiscal policy |
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7 development of Philippine financial system |
1.Obras pias 2. El banco español Filipino de isabela 3. British orient bank 4. Honkong and shanhai banking corporation 5. Monte de piedad y caja de ahorros 6. Bpi iloilo branch office 6. Pnb |
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Started by juan fernandez de leon |
Obras pias |
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First formal bank |
El banco español Filipino de isabela |
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Expanded the Philippine-european trade following the opening of the suez canal |
British orient bank |
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Provide financing |
Honkong and shanhai banking corporation |
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The first savings bank intended to help the poor |
Monte de piedad y caja de ahorros |
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The country's first bank branch |
Bpi iloilo branch office |
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The first universal bank in the Philippines |
Pnb |
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Act no 52 was passed by the 1st Philippine commission placing all banks under the bureau of Treasury |
1900 |
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The BoB took over the task of banking supervision |
1929 |
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Particular group of Filipinos were trying to conceptualize a central bank of the Philippines |
1933 |
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A bill was drafted and approved, however, the bill was returned by the US |
1939 |
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Manuel roxas submitted to congress a bill "establish the central bank of the Philippines" |
1948 |
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Bill was signed into law as republic act no. 265 by elpidio quirino |
June 1948 |
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CBP was inaugurated and formally opened |
January 3, 1949 |
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BSP was established to replace the CBP as the country's monetary authority |
July 3, 1993 |
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The primary objective is to maintain price stability conducive to a balanced and sustainable economic growth |
BSP |
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Provides policy directions in the areas of money, banking and credit |
Responsibilities |
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Formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability |
Liquidity management |
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Its purpose is to preserve purchasing power of our country |
Liquidity management |
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How bsp control money supply |
1. Through interest rate 2. Cash reserves requirement 3. Buying and selling securities |
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BSP has the exclusive power to issue the national currency. All notes and coins issued by the government and are considered legal tender for all private and public debts |
Currency issue |
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Name of currency before |
New design Philippine bank note |
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Name of our currency now |
New generation Philippine bank note |
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The BSP extends discounts, loans and advances to banking institutions for liquidity. Banks allowed to borrow money in BSP but they need to prove that they are exosted with their resources |
Lender of last resort |
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Who is the lender of last resort |
Bsp |
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The bsp supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions |
Financial supervision |
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6 major types of bank |
1. Universal 2. Commercial 3. Thrift 4. Rural 5. Cooperative 6 Islamic |
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The bsp seeks to maintain 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 |
Management of foreign currency reserves |
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Determines the exchange rate policy of the Philippines |
Determination of exchange rate policy |
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Government agency or privately owned entity that collects funds from the public and from other institutions, and invest those funds in financial assets |
Financial institutions |
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Act as intermediaries between saver and borrowers and are differentiated by the way they obtain and invest their funds |
Financial institutions |
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Types of financial institutions |
Depository Non-depository |
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A type of financial institutions which are insured by the federal government against loss, channeling their depositor's money into lending activities |
Depository financial institutions |
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A type of financial institutions which fund their investment activities directly from the financial markets by selling securities to the public. They do not accept deposits and not lending, but they are accepting contributions, payments of insurance companies |
Nondepository financial institutions |
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Specific functios of financial institutions |
1. Investigation and credit analysis 2. Matching the supply and demand for funds 3. Provisions for liquidity |
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4 types of sectors |
1. currency management sector 2. Monetary stability sector 3. Financial supervision sector 4. Corporate services sector |
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A type of sector which is responsible for the printing, minting of our currencies |
Currency management sector |
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A type of sector which is responsible for the control of money supply |
Monetary stability sector |
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A type of sector which is responsible for the operation of financial institutions |
Financial supervision sector |
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A type of sector which is responsible For the human resource management of the bsp. Administrative function |
Corporate services sector |
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3 types of examination |
1. General or regular examination 2. Special or interim examination 3. Special investigation |
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A type of examination that ia conducted once a year, it is to ensure that the financial institutions are stilk solvent |
General or regular examination |
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Capacity of the bank to pay its long term obligations |
Solvency |
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If they can finace their daily operations |
Stability |
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A type of examination which is conducted only when necessary. The purpose of this is for checking of assets and capital of a bank, for checking on specific activity of a bank |
Special or interim examination |
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2 common activities of a bank |
Accepting deposits Lending money |
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A type of examination that is conducted when BSP receives complaints from the customer of the bank as well as the employees of the bank |
Special investigation |
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How do banks earn profits |
Through borrowing funds from depositors then lend it for higher interest, the difference would be their income |
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Composition of balance sheet |
Assets Liabilities Equity or capital |
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Composition of the bank assets |
1. Reserves 2. Securities 3. Loans |
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Equal to the bank's vault cash and its deposits at the central bank |
Reserves |
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2 types of reserves |
1. Vault cash 2. Cash reserves |
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The money available for the bank for lending not only cash but also documents. There will be amount of cash maintained in their vault |
Vault cash |
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The amount of cash deposited to the bsp |
Cash reserves |
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Mainly debt securities which provide a good source of liquidity. Government securities owned by the bank |
Securities |
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Extended to the borrowers |
Loan |
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4 types of loan |
Business Real estate Consumer Personal |