Financial System

2965 Words Aug 7th, 2013 12 Pages
THE PHILIPPINE FINANCIAL SYSTEM

2.1 Basic Building Blocks of a Financial System
Financial System is the system that allows the transfer of money between savers (and investors). It can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions”.
Basic building Blocks of Financial System
1. Money – used to buy goods & services, and acts as a store of value.
2. Financial Instruments – formal obligations that entitle one party to receive payments or a share of assets from another party. Ex: loans, stocks, bonds.
3. Financial Markets
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It supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions.
Vision
The BSP aims to be a world-class monetary authority and a catalyst for a globally competitive economy and financial system that delivers a high quality of life for all Filipinos.
Mission
BSP is committed to promote and maintain price stability and provide proactive leadership in bringing about a strong financial system conducive to a balanced and sustainable growth of the economy. Towards this end, it shall conduct sound monetary policy and effective supervision over financial institutions under its jurisdiction.
Functions as the Republic’s central monetary authority.
Liquidity Management. The BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability.
Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts.
Lender of last resort. The BSP extends discounts, loans and advances to banking institutions for liquidity purposes.
Financial Supervision. The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions.
Management of foreign currency reserves. The BSP seeks to maintain sufficient international reserves to meet

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