Law Summary
Primary Objectives and Powers of the Bangko Sentral
- Responsible for policy directions on money, banking, and credit.
- Supervises banks, finance companies, and quasi-banks.
- Primary objective: maintain price stability conducive to balanced and sustainable economic growth.
- Promotes monetary stability and peso convertibility.
Monetary Board Composition and Appointment
- Composed of seven members: Governor (Chairman), a Cabinet member, and five private sector members.
- Members appointed by the President for six years; no member may be reappointed more than once.
- Qualifications include natural-born citizenship, good moral character, integrity, and competence.
Disqualifications and Removal of Monetary Board Members
- Monetary Board members must divest interests in supervised institutions and cannot hold other public offices.
- Removal by the President for disqualification, incapacity, fraudulent acts, or loss of qualifications.
Monetary Board Meetings and Decision-making
- Meets at least once per week; four members constitute a quorum with the Governor present.
- Decisions require a minimum of four members' concurrence.
- Must maintain complete records of deliberations.
Duties and Authority of Monetary Board
- Issue necessary rules and regulations; direct management and staffing of Bangko Sentral.
- Establish human resource systems and compensation in line with civil service laws.
- Appoint, fix remuneration, and remove personnel with exclusive authority over promotions and transfers.
- Adopt annual budget and indemnify officials against liabilities except in cases of negligence or misconduct.
Accountability of Monetary Board, Officials, and Employees
- Liable for violations, negligence, abuse, or disclosure of confidential information.
- Confidential information disclosure is restricted under specific circumstances.
Governor’s Powers and Duties
- Chief executive officer responsible for agenda preparation and policy execution.
- May delegate administrative functions but removal of personnel requires Monetary Board approval.
- Issues final rulings on enforcement of relevant laws unless overturned by the Board.
Governor's Representation and Emergency Authority
- Represents Ban ko Sentral in dealings with government and foreign entities.
- Can act on Monetary Board’s authority in emergencies with concurrence of two members.
- Must report emergency actions to President and Congress promptly.
Deputy Governors
- Appointed by the Governor with Board approval.
- Act as substitutes in Governor's absence and participate in related governmental meetings.
Data Collection, Research, and Training
- Responsible for economic data compilation and research.
- Authorized to request data from government and private entities.
- Promotes training of technical personnel in money and banking.
Supervision, Examination, and Enforcement
- Supervises banks, quasi-banks, subsidiaries, and affiliates.
- Power to administer oaths, subpoena records, and enforce examination compliance.
- Refusal to comply or false reporting punishable by fines and imprisonment.
Conservatorship and Receivership
- Conservator may be appointed to manage troubled banks or quasi-banks for up to one year.
- Receiver appointed to take custody, administer assets, and manage liquidation if rehabilitation isn't viable.
- Receivership actions not subject to injunctive relief except in cases of grave abuse.
Distribution of Assets in Liquidation
- Debts paid according to Civil Code priorities after covering costs and expenses.
- Proceeds from banking franchise awards subject to Monetary Board’s exclusive control.
Prohibitions and Conflict of Interest
- Bangko Sentral personnel prohibited from holding positions or interests in supervised institutions.
- Ban on borrowing from supervised institutions unless properly secured and disclosed.
- Currency issuance exclusive to Bangko Sentral, with criminal penalties for violations.
Currency and Legal Tender
- Peso is the unit of currency, subdivided into centavos.
- Bangko Sentral has sole authority to issue currency, which is legal tender subject to limits on coin denominations.
- Currency design and issuance regulated by the Monetary Board with Presidential approval.
Demand Deposits
- Liability of banks in Philippine pesos payable on demand via checks.
- Checks are not legal tender but equivalent to cash upon clearing.
Monetary and Exchange Policies
- Monetary Board controls monetary aggregates to maintain price stability.
- Maintains international reserves to support peso convertibility and stability.
- May impose emergency restrictions on exchange during crises.
Foreign Exchange Operations
- Permitted to transact with authorized entities including banks and foreign governments.
- Must maintain positive foreign asset position and report excessive foreign liabilities.
Credit Operations
- May extend rediscounts, discounts, loans, and advances to banks under specified conditions.
- Emergency loans available under special circumstances with collateral and terms set.
Open Market Operations
- Authorized to buy and sell government securities and issue obligations for monetary control.
Bank Reserves and Interbank Settlement
- Banks required to maintain reserves proportional to deposit liabilities.
- Reserve deficiency penalties imposed; possible restrictions on lending for chronic deficiencies.
- Interbank clearing facilities operated by Bangko Sentral with penalties for overdrafts.
Selective Regulation of Bank Operations
- Monetary Board may regulate margins on letters of credit, loan maturities, and security requirements.
- May set portfolio ceilings and minimum capital ratios uniformly.
Government Banking Functions
- Acts as banker and fiscal agent for the Government and its subdivisions.
- Represents the Government with international financial institutions.
- Manages official government deposits and fiscal accounts.
Government Securities
- May act as agent in issuance and redemption of government securities but not guarantee placement.
- Operates Securities Stabilization Fund to maintain market liquidity.
Financial Advisory Role
- Provides opinions on government credit operations abroad and domestically prior to execution.
- Represents Bangko Sentral in the National Economic and Development Authority Board.
Tax and Customs Exemptions
- Exempt from national and local taxes for five years.
- Exemptions on import/export duties for production-related materials and equipment.
Personnel Policies and Political Neutrality
- Subject to Civil Service Law except for key policy or technical positions.
- Officers and employees prohibited from partisan political activities except voting.
Operational and Organizational Transition
- Bangko Sentral to phase out certain functions of the previous Central Bank over specified periods.
- Transfer of assets and liabilities from Central Bank to Bangko Sentral to ensure viability.
- Monetary Board empowered to reorganize staffing without preferential rights to incumbents.
- Separation benefits authorized for separated personnel.
Repealing Clause and Effectivity
- Repeals inconsistent laws and references to Central Bank deemed references to Bangko Sentral.
- Provides for severability and effectivity upon publication.