BANKING AND FINANCE REVIEWER
Online Forum no.1
1. Define Bank in legal terms. (explain)
2. Give at least 2 importance of banks in developing the economy (explain)
3. Discuss at least 2 values of BSP and give a concrete example of each.
Answers:
1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits (R. A.
8791, Section 3.1). A bank can guarantee the lender a return: the bank assumes the risk of lending. For
the borrowers, the bank can create a steady supply of surplus money for loans (from lenders), and
arrange standard loan terms for the borrowers (The Saylor Foundation, n. d., p. 162). In other words, a
bank acts as a legal institution in the money market. It handles legally enforceable agreements with
individuals and/or organizations who want to save, invest, or borrow money in a contractual way. Both
parties benefit from each other. However, both sides can also be prone to risks such as credit risk (risk
for banks) or getting too much in debt (risk for borrowers).
2. Banks play important roles in developing the economy. Banks such as commercial banks or retail
banks help small businesses up to the biggest companies at their operating cash flow management and
serve them long-term financing. This means that banks are somewhat the helping hands of the economy
to assist businesses that pays taxes which is important to raise the funds of the government. Another,
banks are important to maintain the cycle of money in the economy. It helps to make the money of the
public come out of their pockets and be useful to sustain public needs. In other words, the money saved
and invested by individuals and organizations in the bank can be borrowed and be used by the
government and/or private organizations to benefit the public. Thus, if you are using a piggy bank, try to
put your savings in a bank.
3. There are five Bangko Sentral ng Pilipinas (BSP) values. Two of those are PATRIOTISM and INTEGRITY.
Patriotism: Selfless commitment to the service of the Filipino people and the country; Integrity:
Performing mandate with sincerity, honesty and uprightness, worthy of respect and emulation from
others (Bangko Sentral ng Pilipinas, n. d.). An example of BSP's patriotism is when the institution started
supporting the infrastructure plan of president Rodrigo Duterte's 180 billion dollar 'Build, Build, Build'
program that is believed will benefit the lives of many Filipinos. BSP's integrity can be seen as they
follow Section 50 of Republic Act No. 7653 also known as The New Central Bank Act. In compliance with
the law, BSP issues currency notes, and coins within the territory of the Philippines.
References:
Bangko Sentral ng Pilipinas. (n. d.). The BSP Values. Retrieved September 3, 2020 from
http://www.bsp.gov.ph/about/values.asp
, Metro Manila Currency Operations Sub-Sector. (March 2019). Banknotes and Coins. Retrieved
September 3, 2020 from www.bsp.gov.ph
Republic Act No. 8791 (n. d.). Republic Act No. 8791 - BSP. Retrieved September 3, 2020 from
www.bsp.gov.ph
Shen, Alice. (July 2019). Central Banking. Philippines Central Bank to Support Infrastructure plan.
Retreived September 3, 2020 from https://www.centralbanking.com/central-
banks/4291791/philippines-central-bank-to-support-infrastructure-plan
The Saylor Foundation (n. d.). Personal Finance, 162. Retrieved September 3, 2020 from
http://www.saylor.org/books
Online forum no.2
Give the major functions of BSP and interpret the meaning based on your understanding.
Explain why the state supervises banks?
Differentiate government banks to private banks.
Answers:
1. The major functions of Bangko Sentral ng Pilipinas (BSP) are Liquidity Management, Currency issue,
Lender of last resort, Financial Supervision, Management of foreign currency reserves, Determination of
exchange rate policy, and other activities. The BSP generates the right amount of money supply
throughout the country to balance the values in the economy and avoid inflation (Liquidity
Management); In accordance with New Central Bank Act, the BSP has the power to issue the national
currency. It is the sole provider and printer of notes and coins in circulation (Currency issue); The BSP is
the provider of liquidity to all banking institutions that are unable to gain sufficient liquidity (Lender of
last resort); The BSP, being the Republic’s central monetary authority, manages all bank and non-bank
institutions to control and monitor finances (Financial Supervision); The BSP supervises the changing
foreign currencies to maintain the international reserves so that the value of the country's currency
does not decrease (Management of foreign currency reserves); The BSP decides the exchange rate
policy of the country and depends it in the conditions in the market. This is to keep the market exchange
rate equivalent to the announced foreign exchange rate policy (Determination of exchange rate policy);
In addition, BSP acts as the banker, financial advisor and official depository of the government.
2. The reasons why the state supervises banks are because (1) the banks are entrusted with other
people's money. If the public-image of banks was destroyed, people might not trust banks with their
money anymore, in result, it will give negative effects in developing the economy; (2) the state wants to
assure that the banks will perform their functions in the best interest of their clients through the honest
Online Forum no.1
1. Define Bank in legal terms. (explain)
2. Give at least 2 importance of banks in developing the economy (explain)
3. Discuss at least 2 values of BSP and give a concrete example of each.
Answers:
1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits (R. A.
8791, Section 3.1). A bank can guarantee the lender a return: the bank assumes the risk of lending. For
the borrowers, the bank can create a steady supply of surplus money for loans (from lenders), and
arrange standard loan terms for the borrowers (The Saylor Foundation, n. d., p. 162). In other words, a
bank acts as a legal institution in the money market. It handles legally enforceable agreements with
individuals and/or organizations who want to save, invest, or borrow money in a contractual way. Both
parties benefit from each other. However, both sides can also be prone to risks such as credit risk (risk
for banks) or getting too much in debt (risk for borrowers).
2. Banks play important roles in developing the economy. Banks such as commercial banks or retail
banks help small businesses up to the biggest companies at their operating cash flow management and
serve them long-term financing. This means that banks are somewhat the helping hands of the economy
to assist businesses that pays taxes which is important to raise the funds of the government. Another,
banks are important to maintain the cycle of money in the economy. It helps to make the money of the
public come out of their pockets and be useful to sustain public needs. In other words, the money saved
and invested by individuals and organizations in the bank can be borrowed and be used by the
government and/or private organizations to benefit the public. Thus, if you are using a piggy bank, try to
put your savings in a bank.
3. There are five Bangko Sentral ng Pilipinas (BSP) values. Two of those are PATRIOTISM and INTEGRITY.
Patriotism: Selfless commitment to the service of the Filipino people and the country; Integrity:
Performing mandate with sincerity, honesty and uprightness, worthy of respect and emulation from
others (Bangko Sentral ng Pilipinas, n. d.). An example of BSP's patriotism is when the institution started
supporting the infrastructure plan of president Rodrigo Duterte's 180 billion dollar 'Build, Build, Build'
program that is believed will benefit the lives of many Filipinos. BSP's integrity can be seen as they
follow Section 50 of Republic Act No. 7653 also known as The New Central Bank Act. In compliance with
the law, BSP issues currency notes, and coins within the territory of the Philippines.
References:
Bangko Sentral ng Pilipinas. (n. d.). The BSP Values. Retrieved September 3, 2020 from
http://www.bsp.gov.ph/about/values.asp
, Metro Manila Currency Operations Sub-Sector. (March 2019). Banknotes and Coins. Retrieved
September 3, 2020 from www.bsp.gov.ph
Republic Act No. 8791 (n. d.). Republic Act No. 8791 - BSP. Retrieved September 3, 2020 from
www.bsp.gov.ph
Shen, Alice. (July 2019). Central Banking. Philippines Central Bank to Support Infrastructure plan.
Retreived September 3, 2020 from https://www.centralbanking.com/central-
banks/4291791/philippines-central-bank-to-support-infrastructure-plan
The Saylor Foundation (n. d.). Personal Finance, 162. Retrieved September 3, 2020 from
http://www.saylor.org/books
Online forum no.2
Give the major functions of BSP and interpret the meaning based on your understanding.
Explain why the state supervises banks?
Differentiate government banks to private banks.
Answers:
1. The major functions of Bangko Sentral ng Pilipinas (BSP) are Liquidity Management, Currency issue,
Lender of last resort, Financial Supervision, Management of foreign currency reserves, Determination of
exchange rate policy, and other activities. The BSP generates the right amount of money supply
throughout the country to balance the values in the economy and avoid inflation (Liquidity
Management); In accordance with New Central Bank Act, the BSP has the power to issue the national
currency. It is the sole provider and printer of notes and coins in circulation (Currency issue); The BSP is
the provider of liquidity to all banking institutions that are unable to gain sufficient liquidity (Lender of
last resort); The BSP, being the Republic’s central monetary authority, manages all bank and non-bank
institutions to control and monitor finances (Financial Supervision); The BSP supervises the changing
foreign currencies to maintain the international reserves so that the value of the country's currency
does not decrease (Management of foreign currency reserves); The BSP decides the exchange rate
policy of the country and depends it in the conditions in the market. This is to keep the market exchange
rate equivalent to the announced foreign exchange rate policy (Determination of exchange rate policy);
In addition, BSP acts as the banker, financial advisor and official depository of the government.
2. The reasons why the state supervises banks are because (1) the banks are entrusted with other
people's money. If the public-image of banks was destroyed, people might not trust banks with their
money anymore, in result, it will give negative effects in developing the economy; (2) the state wants to
assure that the banks will perform their functions in the best interest of their clients through the honest
