Use of Credit Accommodations
- The Central Bank's charter authorizes it to extend credit accommodations to banking institutions.
- These accommodations serve as tools to regulate and stabilize the banking sector and credit market.
Existing Controls on Interest Rates and Loan Terms
- Prior executive issuances have established ceilings, loan values, and rediscount rates for preferential rediscounting by the Central Bank.
- Lending rates that banks may charge on rediscounted papers have also been fixed.
Impact on Interest Rate Reforms and Monetary Management
- The fixed ceilings, loan values, and rediscount rates have impeded reforms aimed at liberalizing interest rates.
- These controls have also complicated effective monetary management.
Directive on Ceilings, Loan Values, and Rediscount Rates (Section 1)
- The fixed ceilings, loan values, and rediscount rates prescribed by prior executive issuances shall be considered directory, not mandatory.
- The Monetary Board is granted authority to modify these ceilings, loan values, and rates as economic conditions warrant.
- Such modifications must conform to the Central Bank’s charter provisions.
Repeal and Modification of Inconsistent Issuances (Section 2)
- All orders, rules, or regulations that conflict with this executive order are repealed or amended accordingly.
Effectivity of the Executive Order (Section 3)
- The executive order took immediate effect upon its signing on June 25, 1981.