Question & AnswerQ&A (Republic Act No. 7653)
The primary objective of the Bangko Sentral ng Pilipinas is to maintain price stability conducive to a balanced and sustainable growth of the economy, promote and maintain monetary stability, and the convertibility of the peso.
It is established as an independent central monetary authority, a body corporate, government-owned but enjoying fiscal and administrative autonomy.
The Monetary Board is composed of seven members: the Governor (Chairman), a Cabinet member designated by the President, and five full-time private sector members. Members serve for six years, except the initial members where three serve six years and two serve three years. No member may be reappointed more than once.
Members must be natural-born Filipino citizens, at least 35 years old (40 for the Governor), of good moral character, unquestionable integrity, known probity and patriotism, and recognized competence in social and economic disciplines.
Members must resign from any bank/quasi-bank positions or interests before assuming office; they should not hold any other public office; cannot have been connected with multilateral banking or financial institutions or have substantial interest in private banks within one year prior, nor be employed in such institutions for two years after their term, except representing the government.
Penalties include fines (up to P200,000), imprisonment (up to 10 years), and administrative sanctions such as fines (up to P30,000 per day), suspensions of banking privileges, and revocation of licenses depending on the violation.
Bangko Sentral has the sole power to issue Philippine currency within the country, to prevent unauthorized reproduction or circulation of currency substitutes, and to take necessary actions to maintain currency integrity. Violations may be punishable by imprisonment of 5-10 years.
The Bangko Sentral supervises banks and quasi-banks including their subsidiaries and affiliates, conducts regular and special examinations, can compel production of documents, and take corrective or punitive actions against misconduct or unsafe practices.
The Monetary Board may appoint a conservator to manage the bank or declare receivership, designate the Philippine Deposit Insurance Corporation as receiver, order liquidation if rehabilitation is not possible, and oversee asset distribution and enforcement of liabilities under court supervision.
Banks with reserve deficiencies must pay a penalty interest of at least 0.1% per day on the deficient amount and may offset deficiencies with excess reserves within the same week. Chronic deficiencies may lead to limits on new loans or assignment of profits to surplus.
In emergencies or financial panic, the Bangko Sentral may, with Monetary Board approval, extend loans or advances secured by approved assets, subject to conditions including limitations on loans and requirements for indemnity by principal stockholders.
Bangko Sentral is an independent government-owned corporation with fiscal and administrative autonomy. The Monetary Board governs its operations, adopts human resource policies, appoints personnel, and oversees its budget and legal matters.
The Bangko Sentral must publish monthly balance sheets, quarterly economic and financial analyses, semi-annual reviews of the financial system, and an annual report with detailed statistical data. Reports are submitted to the President and Congress within specified deadlines.
No. The Bangko Sentral is prohibited from acquiring shares or participating in ownership or management of any enterprise, either directly or indirectly, except for outstanding development financing loans.