MONEY is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context.
Functions:
Medium of exchange: money allows goods and services to be traded
without the need for a barter system. Barter systems rely on there being a double coincidence of wants between the two people involved in an exchange Store of value: this can refer to any asset whose “value” can be used now or used in the future i.e. its value can be retrieved at a later date. This means that people can save now to fund spending at a later date. Unit of account: this refers to anything that allows the value of something to be expressed in an understandable way, and in a way that allows the value of items to be compared. Standard of deferred payment: this refers to the expressing of the value of a debt i.e. if people borrow today, then they can pay back their loan in the future in a way that is acceptable to the person who made the loan.
Characteristics:
Durability i.e. it needs to last
Portable i.e. easy to carry around, convenient, easy to use Divisible i.e. it can be broken down into smaller denominations Hard to counterfeit - i.e. it can’t easily be faked or copied Must be generally accepted by a population Valuable – generally holds value over time
History:
The history of money concerns the development of means of carrying out
transactions involving a medium of exchange. Money is any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market, or which is legal tender within a country.
Due to the complexities of ancient history (ancient civilizations developing
at different paces and not keeping accurate records), and because the true origins of economic systems precede written history, it is impossible to trace the true origin of the invention of money and difficult to trace the transition from a "barter system" to a "monetary system".
In the ancient histories[1], we find evidence that money has taken two main forms divided into the broad categories of money of account (debits and credits on ledgers) and money of exchange (tangible media of exchange made from wood, paper, bamboo, metal, etc.), and it is debated which was created first.
We also find evidence that many things were used on occasion in ancient markets that could be described as a medium of exchange. These included livestock and grain – things directly useful in themselves – but also merely attractive items such as cowrie shells or beads were exchanged for more useful commodities. However, such exchanges could be described as barter and the common bartering of a particular commodity (especially when the commodity items are not fungible) does not technically make that commodity "money" or a "commodity money" like the shekel – which was both a coin representing a specific weight of barley, and the weight of that sack of barley.
Regarding money of account, we find evidence of what can reasonably be
described as the invention of a very primitive ledger in the form of the tally stick – the oldest of which is dated to the Aurignacian, about 30,000 years ago. While it may not be reasonable to conclude that the use of the most ancient tally sticks found to keep accounting records in the monetary system sense of the term, it does however show that "accounting" – keeping a written record of things counted – is far more ancient than many people assume. David Graeber proposes that money as a unit of account was invented when the unquantifiable obligation "I owe you one" transformed into the quantifiable notion of "I owe you one unit of something". In this view, money emerged first as credit and only later took the form of a medium of exchange.
Regarding money of exchange, the use of representative money
historically pre-dates the invention of coinage. In the ancient empires of Egypt, Babylon, India and China, the temples and palaces often had commodity warehouses which issued certificates of deposit as evidence of a claim upon a portion of the goods stored in the warehouses, a form of "representative money”
While not the oldest form of "money of exchange", we find various metals, both common and precious metals, from which early coins were made, were used in both barter and monetary systems. It is the use of these substances where we find the transition from the barter system to the monetary systems most easily illustrated. While not among the more ancient examples, the Romans' use of bronze illustrates this distinction clearly in the transition of the use of "aes rude" (rough bronze - which is still properly the barter system - the value of the bronze was related to its use in blacksmithing), into bars that had a 5 pound pre-measured weight to make barter easier, called "aes signatum" (signed bronze - which is still properly the barter system like the aes rude), and finally, there was a break from barter system related weights based on the usefulness of bronze in blacksmithing (heavy measures of bronze as bars), into weights measured into coinage (lighter measures of bronze), recognising the usefulness of bronze as a medium of exchange for transactions, not just for making tools. BANKO SENTRAL NG PILIPINAS (BSP) (lit. Central Bank of the Philippines; commonly abbreviated as BSP in both Filipino and English) is the central bank of the Philippines. It was established on July 3, 1993, pursuant to the provision of Republic Act 7653 or the New Central Bank Act of 1993.
Role and Functions:
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.
History: In accordance with a provision in the 1987 Constitution, President Fidel V. Ramos signed Republic Act No. 7653, otherwise known as the New Central Bank Act, into law on June 14, 1993. The law provides for the establishment of an independent monetary authority to be known as the Bangko Sentral ng Pilipinas, its primary objective being the maintenance of price stability. This objective was only implied in the old Central Bank charter. The law also gives the Bangko Sentral fiscal and administrative autonomy which the old Central Bank did not have. On July 3, 1993, the New Central Bank Act took effect. On the evening of September 26, 2012, a Wednesday, the BSP website was hacked by a group named Anonymous Philippines in a protest against the recently passed Cybercrime Prevention Act of 2012. The website was promptly restored in the early hours of the following day.
On April 23, 2013, The Asian Banker named the BSP as the Best Macroeconomic Regulator in the Asia-Pacific Region for 2013 in The Asian Banker Leadership Achievement Awards in Jakarta, Indonesia. The BSP was cited as a “good, strong, and fair-minded regulator.” About a month later, the BSP was given the country award by the Child and Youth Finance International in its 2013 International Summit in Istanbul, Turkey, in recognition of its initiative to integrate financial education in the Philippine elementary school curriculum.
Monetary Board: which exercises the powers and functions of the BSP, such as the conduct of monetary policy and supervision of the financial system. The current members of the Monetary Board are: Nestor Espenilla, Jr., BSP Governor and Chairman of the Monetary Board Carlos Dominguez III, Secretary of the Department of Finance Antonio S. Abacan, Jr. Juan D. De Zuñiga, Jr. Valentin A. Araneta Felipe M. Medalla Peter B. Favila
BANKING INSTITUTIONS
used in this part shall be construed to mean any bank, trust company, bank and trust company, stock savings bank, or mutual savings bank, which is now or may hereafter be organized under the laws of this state.
Importance: They develop the financial securities and provide the financial markets where lenders, borrowers, investors, speculators, and hedgers can exchange money for future payments in the form of interest, for ownership interests, such as stocks, for the payment of future contingent claims, such as with options and derivatives, and for sharing risk, such as the pooling of insurance premiums for financial protection.
Classification: Retail Banking - Retail banking is the procurement of administrations by a bank to individual rather than to organizations, corporate or other banks.
Commercial Banking - provide administrations services such as making
business advances, offering fundamental investment schemes, encouraging saving deposits, fixed deposits, Issuing bank drafts and bank cheques, giving overdraft facilities, bond investment schemes, cash management, mortgage loans, debit cards, credit cards, etc. Private Banking - financial institutions for managing accounts, investments and other services offered by banks to high-net worth individuals (HNI) who are categories as high income professionals or large investors.
Investment Banking - a consultant or assisting institution for individuals,
organizations and governments in raising capital by underwriting assets. Specialized financing - offers various specialized services away from traditional banking. Specialized banks are financial institutions referred as foreign exchange banks, development banks, industry and mine banks, farms and agriculture banks, aboriginal banks (providing financial products and services to aboriginal communities), export-import banks with unique needs.
Central Banks - managing foreign exchange and gold reserves,
implementing monetary policy, acting as a banker’s bank at time of crisis, making official policies regarding interest rates.
