The Bangko Sentral ng Pilipinas or BSP is the central bank of the Philippines. Established on 3 July 1993 under the provision of Republic Act 7653 or the New Central Bank Act of 1993, its primary purpose is to act as a macroeconomic regulator by managing the currency, money supply, and interest rates of the country, as well as oversee the commercial banking system.
What Are The Specific Roles and Responsibilities of Bango Sentral ng Pilipinas?
The New Central Bank Act of 1993 defines the specific roles and responsibilities or functions and operations of the BSP. Take note of the following:
1. Liquidity Management
The BSP is responsible for formulating and implementing monetary policy directed toward influencing the money supply and the money in circulation, as well as maintaining price stability or influencing the inflation rate.
2. Issuance of Currency
Note that the central bank of the Philippines has the sole authority to issue the national currency or Philippine peso. The government recognizes and guarantees that all the coins and notes issued by the BSP as a legal tender for all private and public debts.
3. Lender of Last Resort
Like other central banks in most countries or states, the BSP also functions as a lender of last resort. What this means is that it has the power to extend discounts, loans, and advances to banking institutions for liquidity purposes, especially during a localized or widespread banking crisis.
4. Financial Supervision
Another key role or responsibility of the BSP is to supervise commercial banks, as well as other non-bank establishments performing quasi-banking functions by subjecting these institutions under its legally mandated regulatory powers.
5. Exchange Rate Policy
The Bangko Sentral ng Pilipinas also determines the exchange rate policy of the Philippines. It currently adheres to a market-oriented foreign exchange rate policy to ensure the order or stability in the foreign currency exchange market.
6. Foreign Currency Reserves Management
The central bank is also responsible for maintaining sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the local currency.
7. Bank of the Government
Under the New Central Bank Act, the BSP also functions as the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations.