1.

The main elements of Financial System are as follows:1) Money - is anything that is generally accepted as payment for goods and services and repayment of debts.[1][2] The main functions
of money are distinguished as: amedium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred
payment.
2) Financial Markets- market for the exchange of capital and credit in the economy. Money markets concentrate on short-term debt
instruments; capital markets trade in long-term debt and equity instruments. Examples of financial markets: stock market, bond
market, commodities market, and foreign exchange market.
3) Financial Institutions- institution that collects funds from the public to place in financial assets such as stocks, bonds, money
market instruments, bank deposits, or loans. Depository institutions (banks, savings and loans, savings banks, credit unions) pay
interest on deposits and invest the deposit money mostly in loans.
4) Financial Instruments- A financial instrument is either cash; evidence of an ownership interest in an entity; or a contractual right
to receive, or deliver, cash or another financial instrument.
5) Central Banks- A bank that is constituted by a government or international organization to issue and regulate currency, regulate
banks under its jurisdiction, act as a lender of last resort, and generally ensure a sustainable monetary policy.
- The bank provides liquidity management, currency issue, lender of last resort, financial supervision, management of foreign
currency reserves, determination of exchange rate policy, and micro financing services.

2.
The primary functions of financial institutions of this nature are as follows:

Accepting Deposits

Providing Commercial Loans

Providing Real Estate Loans

Providing Mortgage Loans

Issuing Share Certificates

The main functions of financial institutions are:
1. To help businesses manage risks e.g. by providing insurance in the case of insurance companies.
2. To provide corporate finance as is the case with banks, or investment trusts, which enable lots of investors to own shares in a range
of companies.
1. Financial banking institutions can carry out the following operations:
a) Receive deposits and other returnable funds from the public;
b) Carry out the function of intermediary in the settlement of payment
operations;
c) Operations involving precious metals, as defined by the foreign exchange
legislation;
d) Operate in insurance trading;
e) Promote the renting of safes and safekeeping of valuables;
f) Carry out operations of capitalization;
6
g) Carry out operations of leasing and factoring;
h) Extend guarantees and other undertakings;
i) Carry out credit operations;
j) Carry out operations in the capital markets through intermediation

companies;
k) Deliver payment services;
l) Make transactions, on its own behalf or on behalf of a third party, of
money, financial and foreign exchange market instruments;
m) Participate in stocks and debentures, issue and offering, and providing
related services;
n) Consultancy, keeping, administration and management of the securities
portfolio;
o) Sale and purchase of foreign notes and coins, or travelers cheques;
p) Participating in the capital of companies;
q) Other similar operations that the law does not forbid.
The first function of financial institutions is the transformation of assets, which are acquired through markets, into a wider and more
preferable form, which becomes their liability this function is performed mainly by financial intermediaries, which is undeniably
the most important category of financial institutions.
Also financial institutions are involved in exchanging of assets on behalf of their customers. Other than that, exchanging of assets for
their own personal accounts is also part of their job. Furthermore, financial institutions create financial assets for their customers
and sell those assets to other market participants for a definite emolument. In addition to all these functions, financial institutions
are also involved in providing investment advice to market participants and managing the portfolios of market participants.
Function: Financial institutions provide service as intermediaries of the capital and debt markets. They are responsible for
transferring funds from investors to companies in need of those funds. Financial institutions facilitate the flow of money through the
economy. To do so, savings are pooled to mitigate the risk brought to provide funds for loans. Such is the primary means for
depository institutions to develop revenue. Should the yield curve become inverse, firms in this arena will offer additional feegenerating services including securities underwriting, and prime brokerage.
Banks provide a number of important financial services to businesses:
1. Loans provide businesses with expansion capital. A secured loan is one that is guaranteed by some form of asset such as
buildings and property. An unsecured loan is not backed in the same way. A bank will lend a business a given sum for a specified
period of time e.g. 6,000 for 2 years. The business will then repay the capital sum in instalments with interest added e.g. 360 per
month. The rate of interest on unsecured loans is higher than for secured loans.
2. Business account services enable a business to transact its day-to-day affairs, for example paying wages into employee's accounts,
paying bills, and taking up periods of credit when applicable. Businesses are able to use bank services such as standing orders and
direct debits to pay water, electricity, business rates and other regular bills.
3. Overdraft facilities enable a business to have a short period of credit to smooth out cash flowdifficulties. The business arranges an
overdraft limit with its bank and is permitted to borrow up to the arranged overdraft ceiling. Interest is only charged on the amount
overdrawn each day. So, for example, if the bank was only overdrawn by 100 for 1 day of the year it would pay 1/365 of annual
interest rate for 100.
4. Cheques, credit cards and bank drafts enable a business to smoothly manage its day-to-day payments and transactions. Bank
statements enable the business to keep a regular check on its accounting position.
5. The bank will also provide systematic and ongoing advice, particularly to small businesses and start ups. For example, the bank
will provide detailed advice on how to construct and organise abusiness plan.
6. Banks also provide long-term finance in the form of mortgages for the purchase of land and property.
7. Merchant banks and issuing houses also support companies in the management of share issues, for example, by arranging for

financial institutions to underwrite a new share issue.

3.

THE PHILIPPNE FINANCIAL SYSTEM

THE STRUCTURE OF THE PHILIPPNE FINANCIAL SYSTEM
-FNANCIAL SYSTEM a network that generates, circulates, and controls money and
credit.
-SURPLUS INCOME refers to the excess incomes of an individual.
-OBRAS PIAS the first credit institution n the Philippines; started by Fr. Juan
Fernandez de Leon in 1754 and ended in 1820.
-BANCO ESPAOL Filipino de Isabella II the First Philippine Bank establish in 1851
-FIRST AGRICULTURAL BANK OF THE PHILIPPINES established n 1906 and in 1916 all
of its asset and liabilities were transferred to the newly organized PNB.
-FNANCIAL MARKET are physical locations or electronic forums that facilitate the
flow of funds among nvestors, businesses and governments. It provides the
mechanism for allocating financial resources of funds from savers to
borrowers.
ROLES OF THE FNANCIAL MARKET:
1.Money market operation
2.Expedites the transaction of financial claims
3.Serves as a mean of bringing the forces of demand and supply of financial
clams
4.Facilitates the flow of funds among investors, business, and governments.
5.Provides the mechanisms for allocating financial resources or funds from
savers to borrowers.
6.Raises money by selling shares to investors and its existing share can be
bought or sold.
7.Where lenders and their agents can meet borrowers.
8.Convenes many interested sellers n one place.
9.Provides the place where many commodities are traded.
10.Used to match those who want capital to who have it.
11.Facilitates:
The raising capital in capital markets
The transfer of risk in the derivatives market
International trade in the currency market
1942 PNB closes its doors because of the coming of the Japanese imperial Forces.
Rehabilitation Finance Corporation formed in 1946 to provide credit facilities forthe rehabilitation of agricultural, commerce and industry
reconstruction ofwar-damaged properties and later become the Development Bank of thePhilippines.
Offshore Banking Units any branch, subsidiary of affiliate of Foreign Banking
Corporation that conduct banking transactions in foreign currencies.

Nature and necessity of finance

In life, there are many things that you want to buy and do that requires you to have the time and money to do it. A reason why a lot of people are unable to do everything they
want is because they don't have the time of money. By using finance and with the proper planning, you are given the opportunity to do more with what you have now than

what you were able to do before.

That's one of the key to the success in life, proper planning with your finance. If you plan and spend your resources correctly, you will be able to accumulate more opportunities
and wealth.
Finance- The field of finance deals with the concepts of time, money, and risk and how they are interrelated. It also deals with how money is spent and budgeted
Roles and Responsibilities

As prescribed by the New Central Bank Act, the main functions of the Bangko Sentral are:

1.

Liquidity Management, by formulating and implementing monetary policy aimed at influencing money supply, consistent with its primary objective to maintain
price stability,

2.

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,

3.

Lender of last resort, by extending discounts, loans and advances to banking institutions for liquidity purposes,

4.

Financial Supervision, by supervising banks and exercising regulatory powers over non-bank institutions performing quasi-banking functions,

5.

Management of foreign currency reserves, by maintaining sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to
preserve the international stability and convertibility of the Philippine peso,

6.

Determination of exchange rate policy, by determining the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign
exchange rate policy, and

7.

Being the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and GOCCs.

8.

and be reasonably responsible for the faults of the people behind it get the blame of the opposition to which it is grouped.

Central bank are independent non-commercial banking institutions usually owned the the country in which it operates. Central banking regulations
are very strict and specific. These laws ensure that central bank remain independent in there communications, operations and decisions. They the top
level of two tiered banking systems. In each country there can only be one central bank. Central banks have four broad roals in any economy;
1.

they collect deposits,

2.

they either guard inflation or/and ensure the growth of the economy,

3.

they ensure the proper amount of cash, that is money in physical form, to circulate in the economy,

4.

safeguard the national currency's value from excess fluctuations in short periods of time.