The Functions Of The Bangko Sentral Ng Pilipinass

Before, no one use money as their medium of exchange. Bartering is what the pre-colonial tribes do, not until the Spaniards penetrate the country bringing with them their coined money which we soon named as centavo. Subsequently, there comes the United States who established a unit of currency. During the World War II, the Japanese occupied the Philippines and introduced the Fiat notes. After a while, the country created its own Central Bank under the Republic Act. No. 265 which was soon named as the Bangko Sentral ng Pilipinas. The BSP is now responsible in stabilizing the price to achieve a balanced and sustainable economy. Its functions are to monitor the following: liquidity management, currency issue, lender of last resort, financial supervision,
There are several reasons on why exchange rate is important. First, it is a basic link between two market (local and overseas), it provides a comparison of the price of goods and services in terms of another currency. Second, it affects the inflation rate and future price expectation which also affects the domestic prices of imported goods. For example, an increase in the value of Peso will result to lowering the price of gasoline per liter. Everyone knows that the exchange rate would never be stable, and there goes the third importance: exchange rate could lower the price competitiveness of our exports compared with those countries whose value of currency did not change. Fourth and the last significance, the exchange rate affects the cost of servicing on the country’s foreign debt
According to an article The Philippine Peso, from 1950 to 2009 (2009), there was a time when Philippine peso was just a floating currency or floating exchange rate (fluctuating exchange rate). Long ago, it was believed by President Diosdado Macapagal and his administration (1961) that a floating currency will move the economic development of the Philippines. It was said that the value of Peso regress from Php 2 to Php 3.7 compared to a US dollar. The fluctuating free rate was removed during the 1965. During the 1970s, there were protests and demonstrations due to the first quarter storm which made the Philippine Economy unsteady, because of that the value of Peso fall from Php 4 to Php 6 still, against the dollar. In 1983, the year of Ninoy Aquino’s Assassination (still, in the time of Marcos) the value of peso submerged from Php 8 to Php 20. In the year 1898, due to what happened on the previous administration, the value of peso sank from Php 21 to Php 27 against the dollar. This was the time the country was on crisis. Then, nine years after, Asia financial crisis happened wherein the Philippine Peso value descend from Php 26 to Php 41 to the dollar every year. In the year 2000, there was a political volatility and economic misgovernance that led to the value