NEW CENTRAL BANK ACT Republic Act No. 7653, as amended by Republic Act No. 1121 STATE POLICIES The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money, banking and credit. In line with this policy, and considering its unique functions and responsibilities, the central monetary authority established under this Act, while being a government owned corporation, shall enjoy fiscal and administrative autonomy (RA 7653, Section 1). CREATION OF THE BANGKO SENTRAL NG PILIPINAS Bangko Sentral ng Pilipinas (BSP) It is a government-owned and controlled corporation which the law has established to be the independent central monetary authority of the country. Salient considerations on the creation of Bangko Sentral ng Pilipinas 1. It is established as an independent central monetary authority. 2. Its capital shall be P50,000,000,000, P200,000,000,000 to be fully subscribed by the Philippine Government. 3. The increase in capitalization shall be funded solely from the declared dividends of the Bangko Sentral in favor of the National Government. 4. Any declared dividends of the Bangko Sentral in favor of the National Government shall be deposited in a special account in the General Fund, and earmarked for the payment of Bangko Sentral's increase in capitalization. Such payment shall be released and disbursed immediately and shall continue until the increase in capitalization is fully paid. Responsibilities of BSP 1. To provide policy directions in the areas of money, banking, and credit; 2. To supervise the operations of banks; 3. To exercise regulatory powers as provided in this Act and other pertinent laws over the operations of finance companies and non- bank financial institutions performing quasi- banking functions, hereafter referred to as quasi-banks, and institutions performing similar functions; 4. To promote financial stability and closely work with the National Government, including, but not limited to, the Department of Finance, SEC, the Insurance Commission, and the PDIC; 5. To oversee the payment and settlement systems in the Philippines, including critical financial market infrastructures, in order to promote sound and prudent practices consistent with the maintenance of financial stability; 6. It shall have the sole power and authority to issue currency within the territory of the Philippines; 7. It has the power to issue regulations to prevent the circulation of foreign currencies or currency substitutes, as well as the reproduction of facsimiles of BSP notes; 8. It has the power to investigate, make arrests and conduct searches and seizures for the purpose of maintaining the integrity of the currency; 9. It has the power to engage in foreign exchange transactions in order to maintain price stability; 10. It shall engage in open market operations - exclusively in accordance with its objective of achieving price stability; 11. It shall act as the banker of the government; 12. It shall engage in marketing and stabilization of securities for the account of the government;
13. It acts as the financial advisor of the government. Primary Objective 1. To maintain price stability conducive to a balanced and sustainable growth of the economy. 2. To promote and maintain monetary stability and the convertibility of the peso. NOTE: In the attainment of its objectives, the Bangko Sentral shall promote broad and convenient access to high-quality financial services and consider the interest of the general public. Bangko Sentral ng Pilipinas is considered as lender of last resort Divina - Banks are considered the usual lenders to the public. - BSP is considered as the lender of last resort because it can lend to banks and similar institutions under financial distress when they have no other means to raise funds . - The general public cannot obtain loans from BSP. Dimaampao The Central Bank is referred to as the "lender of last resort" because it is a provider of emergency liquidity financing , pursuant to their function to achieve monetary stability, maintain financial stability, and to provide financial support for their own government. It provides a discretionary provision of liquidity to financial institutions, or the market as a whole, in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source. In this regard, the Bangko Sentral may grant emergency loans or advances in two instances: 1. Emergency or imminent financial panic; and 2. Precarious financial conditions or serious financial pressures. CORPORATE POWERS Corporate Powers of the BSP The BSP is authorized to: 1. Adopt, alter, and use a corporate seal which shall be judicially noticed; 2. Enter into contracts; 3. Lease or own real and personal property and sell or otherwise dispose of the same; 4. To sue or be sued; 5. and otherwise to do and perform any and all things that may be necessary or proper to carry out the purposes of the charter creating it. 6. It may acquire and hold such assets and incur liabilities in connection with its operations authorized by law or as are essential to the proper conduct of such operations. 7. It may compromise, condone or release, in whole or in part, any claim or settled liability to the BSP; regardless of the amount involved, under such terms and conditions as may be prescribed by the Monetary Board to protect the interests of the BSP. BSP has no power to prosecute for the violation of banking laws BSP is a government corporation created principally to administer the monetary and banking system of the Republic, not a prosecution agency like the fiscal's office. Being an artificial person, it is limited to its statutory powers, and the nearest power to which prosecution of violators of banking laws may be attributed is its power to sue and be sued. But this corporate power of litigation evidently refers to civil cases only. NOTE: Mandamus will not lie to compel a prosecuting officer, like the Secretary of Justice, to prosecute a case in court. Violations of banking laws, however, constitute a public offense, the prosecution of which is a matter of public interest, and hence, anyone, even private individuals, can denounce such violations before the prosecuting authorities."
OPERATIONS OF THE BANGKO SENTRAL NG PILIPINAS a. Authority to obtain data and information Extent of the authority of BSP to obtain data and information in relation to the proper discharge of its functions and responsibilities The Bangko Sentral shall have the authority to require from any person or entity , including government offices and instrumentalities, or GOCCs any data, for statistical and policy development purposes in relation to the proper discharge of its functions and responsibilities : Provided, that disaggregated data gathered are subject to prevailing confidentiality laws. The Bangko Sentral, through the Governor or in his absence, a duly authorized representative shall have the power to issue a subpoena for the production of the books and records for the aforesaid purpose. NOTE: Those who refuse the subpoena without justifiable cause or who refuse to supply the Bangko Sentral with the data required, shall be subject to punishment for contempt in accordance with the provisions of the Rules of Court. The authority of the Bangko Sentral to require data from banks shall continue to be exercised pursuant to its supervisory powers set under the law . GR: Data on individuals and firms , other than banks, gathered by the Bangko Sentral shall not be made available to any person or entity outside of the Bangko Sentral whether public or private XPN: Under an order of the court or under such conditions as may be prescribed by the Monetary Board: Provided, however, that the collective data on firms may be released to interested persons or entities: Provided, finally, that in the case of data on banks, the Provisions of Section 27 of this Act shall apply." b. Supervision and examination Supervision and examination authority of the BSP The BSP shall have supervision over and conduct regular or special examinations of banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities. It shall have regulatory authority over, and conduct regular or special examinations of, entities which are subject to its jurisdiction under existing laws. The department heads and the examiners of the supervising and/or examining departments of BSP are authorized to: o Administer oaths to any director, officer, or employee of any institution under their respective supervision or subject to their examination; and o To compel the presentation of all books, documents, papers or records necessary in their judgment to ascertain the facts relative to the true condition of any institution as well as the books and records of persons and entities relative to or in connection with the operations, activities or transactions of the institution under examination, subject to the provision of existing laws protecting or safeguarding the secrecy or confidentiality of bank deposits as well as investments of private persons, natural or juridical, in debt instruments issued by the Government." Injunction does not lie against the authority of BSP to conduct examination and supervision of covered entities No restraining order or injunction shall be issued by the court enjoining the BSP from examining any institution subject to its supervision or examination unless there is convincing proof that the action of the BSP is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending a bond executed in favor of the BSP , in an amount to be fixed by the court. NOTE: The provisions of Rule 58 of the New Rules of Court, insofar as they are applicable and
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