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DOMINGO, Celine Elaiza B.

BAS FIN – Sec 3

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.


 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
 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.


 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


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.
(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

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
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.

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
 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


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.

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.

 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

 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.