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1.

Money, Banking and Financial Markets

500000 450000 400000

GDP, GNP and Net Income from Abroad of the Philippines 1990-2009

GDP 350000 300000 250000 200000 150000 100000 50000 0 -50000


Caete, Precious Anne

Net Income from Abroad

GNP

Interest Rates on Selected Bonds, 1994 1994-2007


Interest rate (%)
20 18 16 14 12 10 8 6 4 2 0 1994 1996 1998 2000 2002 2004 2006

91-day T-bill Government Bonds

Source: IFS

Realin, Reuel

PSE Composite Index (2003-2010)


4,000.00 3,500.00 3,000.00 2,500.00

Index

2,000.00 1,500.00 1,000.00 500.00 0.00

2003

2004

2005

2006

2007

2008

2009

2010

Month/Year

Neri Neri, Jhennie

Index Dec 1980=100

120 100 80 60 40 20 0 1975 1980 1985 1990 1995 2000 2005 2010

Figure 3a: Effective Exchange Rate of the Philippine Peso Against Major a: Trading Partners US, Japan, EMU and UK 1980-2008 UK,
Source: Bangko Sentral ng Pilipinas (BSP) http://www.bsp.gov.ph/dbank_reports/ExchangeRates_ _rpt.asp?frequency=Monthly&range_from=19 http://www.bsp.gov.ph/dbank_reports/ExchangeRates_4_rpt.asp?frequency=Monthly&range_from=

Gonzales, Arlene

Exchange Rate Peso/US Dollar 60 50 40 30 20 10 0 1975 1980 1985 1990 1995 2000 2005 2010 2015

Figure 3b: Philippine Peso b: Peso-US Dollar Exchange Rate, 1980-2009 2009
Source: Bangko Sentral ng Pilipinas (BSP) http://www.bsp.gov.ph/dbank_reports/ExchangeRates_ _rpt.asp?frequency=Monthly&range_from=1970 http://www.bsp.gov.ph/dbank_reports/ExchangeRates_1_rpt.asp?frequency=Monthly&range_from= &range_to=2010&conversion=Average &conversion=Average

Gonzales, Arlene

Money Growth M1 and M2 in the Philippines 1999-2009


70 60 Money Grwoth Rate (%) 50 40 30 Broad Money (M2) 20 10 0 -10 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Orbien, Lyra Benedicte

Narrow Money (M1)

Consumer Price Index and Money Supply, 1993-2006


160 140 120 Index = 2000 100 80 60 40 20 0 1997 1999 2001 2003 2005 CPI Money Supply

Growth rate

Busine, Clarabel

Annual Inflation Rate versus Money Growth Rate


Philippines, 1997-2009
Source: ASEAN Finance and Macroeconomic Surveillance Unit (FMSU) ASEAN Member Countries' National Statistical Offices, Central Banks, and other relevant agencies Bangko Sentral ng Pilipina 25 In percentage 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Inflation Rate YEAR Money Growth (M2 Annual Rate)
ABELEDA, CHOLO and REYES,KEHRL

Money Growth (M2 Annual Rate) and Interest Rates (Government Bonds), 1997-2007
Annual Rate (%) 25
20 15 10 5 0

Governmen t Bonds M2 growth rate

Source: http://www.bsp.gov.ph/statistics

Goto, Sayuri

1998 0 -1 -2 -3 -4 -5 -6

2000

2002

2004

2006

2008

2010

Percent of GDP

Figure 8: Government Budget Surplus or Deficit as a Percentage of Gross Domestic Product, 1999-2009
Source: Bangko Sentral ng Pilipinas http://www.bsp.gov.ph/statistics/spei_new/tab61n.htm

Gonzales, Arelene

2. The Financial System

Value of Money Market Instruments Philippines, 1982-2007 2007


source:IFS Philippines Money Market Instruments (in Billion Pesos) 18 16 14 12 10 8 6 4 2 0 1982 1984 1986 1988 1990 1992 1994 YEAR
ABELEDA, CHOLO and REYES,KEHRL

1996

1998

2000

2002

2004

2006

Value of Capital Market Instruments in the Philippines 1990-1999


In Million Pesos 6000 5000 4000 investments 3000 2000 1000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 loans bonds

Busine, Clarabel

Table 4 Principal Financial Intermediaries and Value of Their Assets


Value of Assets (Php Billions, End of Year) 1970 1980 1990 2000 2005 2006 14.1 144.5 539.7 3,013.6 3,986 4,392.6

Type of Intermediary (A) Depository Institutions (Banks) (1) Commercial Banks 1 (2)Thrift Banks Savings and Mortgage Banks Private Development Banks Stock Savings and Loan Associations Micro Finance (3) Rural Banks (B) Non-Banks 2 TOTAL

0.7 0.2 0.1 0 0.7 0 15.8

7.4 1.6 1.6 0 5.6 59.3 220

21.9 11.3 4.5 0 13.9 190.5 781.8

158.1 69 18.7 0 67.4 751.1 4,077.9

269.2 71.1 16.9 0.6 120.3 1,155.4

346.8 77.7 28.7 0.6 139.3 1,271.5

5,619.5 6,257.2 Rafanan, Anna Victoria

NOTE: 1 With Development Bank of the Philippines starting February 1996 and Al-Amanah Islamic Bank of the Philippines starting January 1997 (Consolidated with commercial banks since February 1996 for DBP and January 1997 for Al-Amanah Islamic Bank). 2 Includes Investment Houses, Finance Companies, Investment Companies, Securities Dealers/Brokers, Pawnshops, Lending Investors, Non-Stock Savings & Loan Assn., Mutual Building and Loan Assn., Venture Capital Corp. and others; and Private and Government Insurance Companies including SSS and GSIS. Includes Credit Card Companies beginning September 2003.

Source:Total Resources of The Financial System: http://www.bsp.gov.ph/statistics/statistics_online.asp

Supervisory and Regulatory Agencies in the Philippine Financial System


Government-Owned/Controlled Banks and Financial Institutions Regulatory Agency Bangko Sentral ng Pilipinas (BSP) Philippine Deposit Insurance Corporation (PDIC) Securities and Exhange Commission Function/ Objective To maintain price stability and promote and maintain monetary stability and the convertibility of the Peso To provide insurance protection to bank depositors and act as an effective regulator of a bank To strengthen the corporate and capital market infrastructure of the Philippines, and to maintain a regulatory system based on international best standards and practices, that promotes the interests of investors in a free, fair and competitive business environment. Develop an institutional structure and mechanism by which Filipino Muslims can actively participate in the economic and financial life of the nation To influence and accelerate sustainable economic growth, through the provision of resources. To provide 8ompensation to owners of private agricultural lands and credit assistance to small farmers and fisherfolk, be an official depository of government funds, and to spur countryside development.

Al-Amanah Islamic Investment Bank of the Philippines Development Bank of the Philippines

Land Bank of the Philippines

Source: Philippine banking almanac III : ready for the 21st century pp. 113-140, www.sec.gov.ph, www.devbankphil.com.ph, www.landbank.com

Feliciano, Kendra Clare

3. Money

Table 1 Measures of the Monetary Aggregates


Value as of Dec. 2009 (Php millions) M1 = Currency Outside Depository Corporations (Currency in Circulation) + Transferable Deposits (Demand Deposits) Total M1 = M1 + Savings Deposits + Time Deposits Total M2 458,149.00 763,713.00 1,221,862.00 1,221,862.00 1,621,887.00 1,043,379.00 3,887,128.00
Rafanan, Anna Victoria

M2

Source: Depository Corporations Survey: http://www.bsp.gov.ph/statistics/sdds/dcs.htm

50 Annual Groth Rate (%) 40 30 20 10 0 -10 1996 1998 2000 2002 2004 2006 2008 2010
Abeleda, Cholo, Gonzales, Arlene & Reyes, Kehrl

M1 M2 M3

Figure 1: Growth Rates of the M1, M2 and M3 Aggregates 1997-2009


Sources: Philippine National Statistics Coordinaton Board (NSBC) http://www.nscb.gov.ph/

4. Interest Rates

91-day Treasury Bill Rates 2001-2009


14 12 10 8 6 4 2 0 2001 2002 2003 2005 2006 2007 2009

Interes Rate (%)

Source: http://www.bsp.gov.ph/statistics/sdds/tbillsdds.htm

Maulanin, Xervin

5. Understanding the Behavior of Interest Rates

Expected Inflation and Interest Rates (91-day T-bill) Monthly Jan 2004 Jan 2010

Rate (%)
30 25 20 15 10 5 0 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Interest Rate on a 91-day Tbill

Core Inflation (Expected)

Headline Inflation (Expected)

Sources: http://census.gov.ph/data/sectordata/2010/cp100217r.htm http://www.bsp.gov.ph/statistics/sdds/tbillsdds.htm IFS

Realin, Reuel

Money Growth and Interest Rates, 1999-2009


25 (% annual growth rate) 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 T- Bill Rates Money Supply(Growth in %)

Mariano, Patricia Luz

6. Risk and Term Structure of Interest Rates

Value of Bonds 2007 Philippines, 1982-2007


source:IFS Philippines 7 Bonds (in Billion Pesos) 6 5 4 3 2 1 0 1982 1985 1988 1991 1994 YEAR
REYES,KEHRL

1997

2000

2003

2006

Interest Rate (%) 18 16 14 12 10 8 6 4 2 0 1998 2000 2002 2004 2006 2008 2010 5-yr t-bonds 10-yr t-bonds 20-yr t-bonds 91-day t-bills

Figure 4: Movements over Time of Interest Rates on Phil. Government Bonds


Source: Bureau of the Treasury http://www.treasury.gov.ph/

Gonzales, Arlene

GOVERNMENT BOND YIELD, 1994 1994-2007


source:IFS Philippines Government Bond Yield (percent per Anuum) 20 18 16 14 12 10 8 6 4 2 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YEAR
REYES,KEHRL

7. The Management of Financial Institutions .

Balance Sheet of All Deposit Banks in the Philippines, 1982-2007


source:IFS Philippines Deposit Money Banks(in Million US Dollars) 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1982 1987 1992 YEAR Deposit Money Banks: Assets Deposit Money Banks: Liabs.
REYES,KEHRL

1997

2002

2007

Balance Sheet Profit/Deficit in All Deposit Banks Philippines, 1982-2007 2007


source:IFS Philippines 8000 Balance Sheet Profit/Deficit (in Billion US Dollars) 6000 4000 2000 0 1982 -2000 -4000 -6000 -8000 1987 1992 1997 2002 2007

YEAR
REYES,KEHRL

8. The Banking Industry: Structure and Competition .

Bank Share of Total Nonfiinancial Borrowing, 1970-2007


5000 4500 4000 In Billions Pesos 3500 3000 2500 2000 1500 1000 500 0 1970 1975 1980 1985 1990 1995 2000 2005 Thrifts Commercial Banks

Mariano, Patricia Luz

Licensed Banks in the Philippines(2009)


Commercial Credit Quasi-Banks, 12 Banks, 23 Unions, 44 Thrift Banks, 84

Rural Banks, 711

REYES,KEHRL

Top Ten Commercial Banks in the Philippines As of December 31, 2008 In terms of ASSETS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banco de Oro (BDO) Php 808.0 billion Metrobank - Php 758.5 billion Bank of the Philippine Islands (BPI) Php 658.4 billion Landbank of the Philippines (LBP) Php 434.0 billion Development Bank of the Philippines (DBP) Pho 290.9 billion Philippine National Bank (PNB) Php 276.8 billion Rizal Commercial Banking Corp. (RCBC) Php 270.2 billion Unionbank of the Philippines (UBP) Php 208.2 billion Chinabank Php 207.3 billion Citibank Php 187.8 billion

In terms of DEPOSITS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. BDO - Php 634.3 billion Metrobank - Php 585.8 billion BPI - Php 541.2 billion Landbank - Php 333.6 billion PNB - Php 201.2 billion RCBC - Php 196.4 billion Chinabank - Php 173.9 billion Unionbank - Php 162.0 billion Allied Bank Php 139.8 billion Citibank - Php 121.6 billion

Figures taken from published financial statements of each bank.


http://www.pinoymoneytalk.com/largest-banks-philippines/ Mariano, Patricia Luz

Table 3: Top 10 Largest Banks in the World, (Forbes 2009) Bank 1. HSBC Holdings 2. Banco Santander 3. ICBC 4. JPMorgan Chase 5. Mitsubishi UFJ Financial 6. CCB-China Construction Bank 7. BNP Paribas 8. Bank of China 9. Crdit Agricole 10. Intesa Sanpaolo Country United Kingdom Spain China United States Japan China France China France Italy Assets (Billion $) 2,520.45 1,318.86 1,188.08 2,175.05 1,931.17 903.35 2,888.73 817.84 2,064.17 835.15 Total 16,642.85
Realin, Reuel

Source: http://www.forbes.com/lists/2009/18/global-09_The-Global-2000_IndName.html

9. An Economic Analysis of Banking Regulation


Major Banking Legislation in the Philippines from 1948 to 2002
The Central Bank Act of 1948 (RA 265) Creation of the Central Bank of the Philippines (CBP)

1963 Charter of the Philippine Deposit Insurance Corporation (RA 3591) Creation of the Philippine Deposit Insurance Corporation (PDIC)

Presidential Dercee No. 1801 (1981) Establishing the CBP as the central monetary authority

Rural Banks Act of 1992 (RA 7353) Creation, organization and operation of rural banks

1987 Philippine Constitution and the New Central Bank Act of 1993 (RA 7653) Establishment of the Bangko Sentral ng Pilipinas (BSP)

Thrift Banks Act of 1995 (RA 7906) Regulation of the organization and operations of thrift banks

Revised Non-Stock Savings and Loan Association Act of 1997 (RA 8367) Regulation of the organization and operation of non-stock savings and loan associations

The General Banking Law of 2000 (RA 8791) Regulation of the organization and operations of banks, quasi-bansk and trust entities

The Special Purpose Vehicle (SPV) Act of 2002 (RA 9182) Granting tax exemptions and fee privileges to special purpose vehicles which acquire or invest in non-performing assets, setting the regulatory framework

Source: http://www.chanrobles.com/philippinebankinglaws.htm Goto, Sayuri & Latauan, Edcar

10. The Determinants of the Money Supply Determinants

Money Multiplier and Currency Ratio in the Philippines, 1959-1968 1968


3.3 3 2.7 2.4 2.1 1.8 1.5 1.2 0.9 0.6 0.3 0 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 Money Multiplier c ratio

Masangcay, Chiara

Masangcay, Chiara

Money Supply (M 1986-2007 (M1), 2007


1000 M1 Money Supply (Billions of Pesos) 900 800 700 600 500 400 300 200 100 0 1986 1989 1992 1995 Year Source: IFS July 2009 - Philippines 1998 2001 2004 2007 M1

Monetary Base in the Philippines 1959-1968


3000 2700 2400 2100 in billion Pesos 1800 1500 1200 900 600 300 0 1959 1961 1963 Year 1965 1967 monetary base

11. Central Banks, Monetary Policy Goals, Strategy and Tactics

Inflation Rates and Inflation Targets for the Philippines, 1995 - 2010
10 9 8 7 INFLATION 6 5 4 3 2 1 0 1995 1997 1999 2001 2003 2005 2007 2009 Inflation Lower Bound Target Range Target Midpoint Upper Bound Target Range

The adoption of inflation targeting framework of monetary policy was on January 2002 Sources: http://www.bsp.gov.ph/monetary/targeting.asp http://www.bworldonline.com/Research/populareconomics.php?id=0116 NSO

Mariano, Patricia Luz

Philippine Interbank Call Loan Rate, 1982-2009


30.0 25.0

20.0

15.0

10.0

5.0

0.0 1982 1987 1992 1997 2002 2007

Source: http://econdb.pids.gov.ph

Eustaquio, Amado

12. Foreign Exchange Market .

Exchange Rates Peso Prices of Selected Currencies 2000-2009

US DOLLAR
60 50 40 30 20 10 0
2000

SAUDI RIAL
20 15 10 5 0

2004

2008

2004

2008

EURO
80 70 60 50 40 30 20 10 0 0.6 0.5 0.4 0.3 0.2 0.1
2004 2008

JAPANESE YEN

2004

2008

Carpio, Dinkie Lyssa

Purchasing Power of Peso (PPP) 1957-2009


60 50 40 30 20 10 PPP, 0.64 0 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009

Caete, Precious Anne

Purchasing Power Parity - Philippines/United States 1980-2008


Sources: http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index http://www.imf.org
60.00 50.00

PHP per US dollar

40.00 30.00 20.00 10.00 0.00 1980 1986 1991 1997 2002 2008
Exchange Rate(PHP/USD) PPP conversion rate(PHP/USD)

Maulanin, Xervin

Value of Peso and Interest Rates, 1980 1980-2008


35 INominal Interest Rates (%) 30 25 20 60 15 10 5 0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Sources http://www.bsp.gov.ph

120 100 80 Effective Exchange Rate

40 20 0

Orbien, Lyra Benedicte

13. International Financial System 13.

Balance of Payments of the Philippines 1990-1999


12000 10000 in millions of US dollars 8000 6000 4000 2000 0 -2000 -4000 -6000 -8000
Current Account, Net Capital and Financial Account, Net Net Unclassified Items Overall BOP Position 1990 -2567 1776 -320 -93 1991 -869 1878 462 2103 1992 -858 1850 -157 1492 1993 -3016 2820 -514 -166 1994 -2950 4547 -49 1802 1995 -3297 3297 3393 454 631 1996 -3953 11075 -3010 4107 1997 -4351 6593 -5245 -3363 1998 1546 187 -470 1359 1999 6548 -2325 -664 3839

Source: BSP

Caete, Precious Anne

14. Demand for Money

Velocity 16 14 12 10 8 6 4 2 0

Velocity of M1 and M2 in the Philippines 1982-2007

M1 M2

1982 1985 1988 1991 1994 1997 2000 2003 2006


Busine, Clarabel

15. An Aggregate Demand and Supply Analysis

Unemployment Rate and Inflation Rate in the Philippines 1990-2008


Rate (%) 25

20 Unemployment Rate Inflation Rate

15

10

0 1990 1993 1996 1999 2002 2005 2008


Caete, Precious Anne & Goto, Sayuri

Table 4 Unemployment and Inflation During the Negative Supply Shock Periods, 1973-1975 and 1978-1980 (Philippine Data)
Year 1973 1974 1975 Unemployment Rate (%) 4.9 4 3.9 Inflation (Year to Year) (%) 15.7 31.9 4.6 Year 1978 1979 1980 Unemployment Rate (%) 4.9 no data 7.9 Inflation (Year to Year) (%) 7.1 17.4 17.5

Sources: National Statistics Office: http://www.census.gov.ph/data/sectordata/tscpimon.html Venida, Victor S.Employment, Productivity and the Informal Sector in the Philippines, 1974-1988: An InputOutput Analysis. http://www.iioa.org/pdf/12th%20conf/nydrfr98.pdf Rafanan, Anna Victoria

Table 5 year 1995 1996 1997 1998 1999

Unemployment and Inflation in the Philippines during the Favorable Supply Shock Period in US (1995-1999) unemployment rate % inflation (year to year) % 9.5 6.7 8.6 7.5 8.7 5.6 10.1 9.3 9.8 5.9
Eustaquio, Amado

Table 6 year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Unemployment and Inflation in the Philippines during the Negative Demand Shock Period in US (extended from 2000-2009) unemployment rate % inflation (year to year) % 11.2 6.8 11.1 5.0 10.3 6.0 10.6 3.1 11.0 3.1 11.3 5.5 8.1 7.6 7.8 6.2 7.4 2.8 7.7 9.3 Eustaquio, Amado

16. The Transmission Mechanisms of Monetary Policy

Real and Nominal Interest Rates on 91-Day T-bills in the Philippines 2000-2008 Rate (%)
10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4

Real Nominal

2000 2001 2002 2003 2004 2005 2006 2007 2008

Bantigue, Agnes May

17. Examining Money and Inflation

GDP Deflator and Money Supply Philippines, 1993-2005


Pesos
700,000 0

600,000

20

500,000 40 400,000 60 300,000 80 200,000

Money Supply GDP Deflator (2005 = 100)

100,000

100

120

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Feliciano, Kendra Clare

Inflation and Money Growth Philippines, 1996-2007 Rate (%)


30.0 25.0 20.0 15.0 10.0 5.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 -5.0 -10.0
Bantigue, Agnes May

Inflation

Money Growth 2 years ago

DEBT-GDP Ratio Philippines, 2003-2010


35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2002 2003 2004 2005 2006 2007 2008 2009 2010
Bantigue, Agnes May

DEBT-GDP

Unemployment Rate Philippines, 1995-2009


16 14 12

Unemployment Rate (%)

10 8 6 4 2 0 1995 1996 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Maulanin, Xervin

General List of Sources: Asian Development Bank ASEAN Finance and Macroeconomic Surveillance Unit Bangko Sentral ng Pilipinas International Finance Statistics National Statistical Coordination Board National Statistics Office World Bank

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