History of Philippine Currency and Monetary Standards | Business Finance

Summary

This discussion provides an overview of the history of Philippine currency and monetary standards. It explains the role of money in the economy, the establishment of the monetary unit (the Philippine peso), and the country's managed currency system. Key points include the issuance of currency by the Central Bank, rules governing currency circulation, and the process for replacing unfit or damaged currency. The presentation touches on the historical evolution of currency, notable features of new-generation coins and banknotes, and the importance of understanding these aspects for business finance and exams.

Takeaways

• 💰 The Philippines follows a managed currency system, with the peso as its monetary unit.
• 📜 Standard money is the monetary unit recognized by the government as the basic standard of value.
• 🏦 The power to issue notes and coins in the Philippines rests with the Bangko Sentral ng Pilipinas.
• 🔒 All notes and coins issued by the central bank are backed by the assets of the bank and guaranteed by the Philippine government.
• 💱 The central bank must exchange Philippine currency on demand for different denominations to meet business and economic needs.
• ❌ Mutilated or unfit notes and coins, like those that have lost significant parts of their surface or signatures, will not be replaced by the central bank unless damaged accidentally.
• 🔥 Old notes and coins, over five years for bills and twelve years for coins, are subject to retirement and destruction under strict surveillance.
• 📅 The first mint in the Philippines was established by a royal decree in Intramuros in 1857.
• 🖼️ The latest currency designs include new security features and artistic elements like the 1000-peso polymer note featuring a South Sea pearl and traditional designs.
• 📚 Students are encouraged to read about the history of Philippine currency for their first-term exam, particularly focusing on key regimes and monetary standards.

Q & A

What is a monetary standard or system?

A monetary standard or system is established when a country sets rules to govern the creation of money and control its quantity in circulation. These rules may be followed strictly or accepted as guidelines for money management.

What is the monetary unit of the Philippines?

The monetary unit of the Philippines is the Philippine peso.

What is 'standard money' in the context of the Philippine monetary system?

Standard money is the monetary unit recognized by the government as the ultimate basic standard of value, upon which all other kinds of money are convertible.

What is the current monetary system in the Philippines called?

The current monetary system in the Philippines is called the managed currency system.

Who is responsible for issuing currency in the Philippines?

The Banco Central ng Pilipinas (Central Bank of the Philippines) is responsible for issuing notes and coins in the country.

What happens to mutilated or damaged currency in the Philippines?

Mutilated or damaged notes and coins, such as those that have lost more than two-fifths of their surface, are demonetized without compensation unless it can be proven that the damage occurred due to accidental causes or forces beyond the holder's control.

What is the process for retiring old notes and coins in the Philippines?

Notes that are over five years old and coins that are over twelve years old are retired. The retired paper currency is perforated, bundled, stamped with a perforation date, and incinerated under heavy surveillance.

What is the significance of the 'people power' coins mentioned in the transcript?

The 'people power' coins are historical Philippine coins. The first mint in the Philippines was established in Intramuros by royal decree in 1857.

What are some key security features of the new generation Philippine currency?

The new generation Philippine currency includes security features such as a giant pearl, the Tinalak design, and security elements designed to prevent counterfeiting.

What is the role of the Central Bank in currency exchange and replacement?

The Central Bank is responsible for exchanging Philippine currency of any denomination on demand. If the requested denomination is unavailable, it will provide notes or coins of the closest possible value.

Outlines

00:00

💵 Overview of Philippine Currency and Monetary Standards

This paragraph introduces the discussion on the history of Philippine currency and monetary standards. It explains that a monetary standard involves rules for the creation and control of money. The Philippine peso is the standard unit of currency, and the country operates under a managed currency system with the Bangko Sentral ng Pilipinas being the sole authority. The importance of understanding the different elements of the financial system, including the history and factors affecting currency value, is emphasized.

05:01

💰 Exchange and Denomination of Philippine Currency

This section discusses the Central Bank's role in facilitating business transactions by exchanging Philippine currency for different denominations on demand. If the bank is unable to meet the requested denomination, it must provide an approximate alternative. It also outlines the replacement policy for unfit or mutilated notes and coins, which are not replaced if they have lost significant portions or have been tampered with. The bank is responsible for withdrawing and demonetizing such currency without compensation unless proven to be damaged by uncontrollable forces.

10:02

🔥 Retirement and Security of Philippine Currency

This paragraph focuses on the retirement and incineration of old currency. Notes and coins that exceed their life span (five years for notes, twelve years for coins) are withdrawn and destroyed under strict surveillance. It also provides some historical trivia about the Philippine mint, new generation currency coins, and security features of recent currency. The paragraph encourages reading the provided reference book for a more detailed understanding of the monetary standards and the characteristics and history of Philippine currency.

15:04

📚 Conclusion and Further Reading on Philippine Currency History

The final paragraph wraps up the discussion by highlighting that the detailed history of Philippine currency will not be covered in depth during the presentation. Instead, it is recommended for personal reading, emphasizing key historical periods such as the Japanese regime. The paragraph hints at the importance of this historical knowledge for future exams and stresses the need to appreciate the evolution of the Philippine currency as part of a broader understanding of business finance.

Keywords

💡Monetary Standard

A monetary standard refers to the set of rules that govern the creation and circulation of money in a country. In the Philippines, the monetary unit is the peso, and the system is known as a managed currency system, where the Bangko Sentral ng Pilipinas (BSP) controls the currency in circulation. This concept is central to the video as it explains how the government maintains control over the currency supply and value.

💡Standard Money

Standard money is the monetary unit recognized by the government as the ultimate basic standard of value. In the Philippines, this is the peso. This is critical because all other forms of money are convertible into standard money, establishing its importance in the overall financial system, as discussed in the video.

💡Bangko Sentral ng Pilipinas (BSP)

The BSP is the central bank of the Philippines, responsible for issuing notes and coins, managing monetary policy, and safeguarding the financial system. The video highlights its authority in regulating currency and ensuring economic stability through policies such as currency issuance and exchange.

💡Managed Currency System

This is a monetary system where the government, through its central bank, controls the quantity of money in circulation. In the Philippines, this system allows the BSP to ensure that money supply aligns with the country’s economic needs. The video explains that this is the framework under which the Philippine peso operates.

💡Currency Circulation

Currency circulation refers to the flow of money, both coins and notes, within the economy. The video explains how BSP manages the circulation by ensuring that notes and coins are backed by assets and periodically replacing damaged or mutilated currency to maintain efficiency in the financial system.

💡Inconvertibility of Currency

Inconvertibility refers to the central bank's guarantee that any denomination of Philippine currency can be exchanged for another denomination upon request. The video illustrates this policy by explaining how the BSP handles requests for currency exchanges, ensuring flexibility in financial transactions.

💡Mutilated Notes

Mutilated notes refer to currency that has been damaged through tearing, burning, or other physical alterations. The video discusses how the BSP handles such notes by demonetizing them if they are too damaged to be identified, but may replace them if the damage is proven accidental.

💡Currency Retirement

Currency retirement is the process by which old or damaged currency is withdrawn from circulation and destroyed. The video explains how notes older than five years and coins older than twelve years are retired, with the retired bills being incinerated under strict surveillance at the BSP.

💡Philippine Peso

The Philippine peso is the official currency of the Philippines and is the standard monetary unit used within the managed currency system. Throughout the video, the peso is highlighted as the fundamental unit for transactions, financial planning, and the country’s economic stability.

💡New Generation Currency

New generation currency refers to the latest set of coins and notes issued by the BSP with updated designs and enhanced security features. The video briefly mentions this in the context of recent changes in the design and material of the currency, like the 1000 peso polymer note, which includes modern anti-counterfeit measures.

Highlights

Introduction to the Philippine monetary system, focusing on the managed currency system.

Definition of standard money as the basic unit of value recognized by the government.

Banco Central ng Pilipinas holds the sole power to issue notes and coins in the Philippines.

The notes and coins issued by the central bank are liabilities and must not exceed the total assets of the bank.

Central bank safeguards the issuance of currency, which is fully guaranteed by the government of the Philippines.

Philippine currency is convertible on demand, and the central bank must exchange denominations when requested.

Mutilated notes and coins that lose more than two-fifths of their surface area will not be replaced by the central bank.

The central bank is responsible for the retirement of old notes (after five years) and coins (after twelve years).

Currency retirement procedures involve incinerating old bills weekly under strict surveillance by central bank officials.

The first mint in the Philippines was established in Intramuros by royal decree in 1857.

Introduction of the new generation currency coins issued by a recent administration.

Overview of security features and designs of the latest generation of Philippine currency.

Recent introduction of the 1000-peso polymer banknote featuring a South Sea pearl design.

Historical context of the monetary system under different regimes, including the Japanese occupation.

The Hawala system, a trust-based exchange system, is briefly introduced in relation to business finance.

Transcripts

welcome to our discussion for module 2

the history of philippine currency and

the philippine monetary standards so

before we deal with the

history proper we look at

our general view of the

philippine currency in the monetary

standards

so

a country said to establish a monetary

standard or system when it sets down

rules to govern the creation of money

and control the quantity in circulation

whether the rules are strictly followed

or are to be accepted simply as

guidelines for its own money managers it

will start out by deciding what its

monetary unit will be so in the

philippines we have the philippine peso

so there is a terminology called the

standard money standard money is the

monetary unit recognized by the

government as the ultimate basic

standard of value upon which all other

kinds of money are convertible in the

philippines the monetary system

is called the managed currency system

so only

is the bank of central pilipinas

and the monetary unit is the peso so at

the end of this discussion we will be

able to still understand and learn the

different key elements that meet up the

financial and economic system the

importance history the factors that

affect their

value

okay let's go

so we already have discussed the role of

money in our economic system in the

previous discussion video so we will

proceed with the history of philippine

currency and philippine monetary

standards focusing on the nature of

monetary standard the classification of

the monetary standards and the outline

of this of the history of philippine

monetary system so

normally

history in a philippine monetary system

i will not be discussed it uh

in detail one by one because this is

already available in our reference book

because

uh interpretation on the history of

philippine monetary system simply

because

uh

monetary system right let's go with uh

a brief description of what currency is

according to central bank act section

51. it includes all filipino notes and

coins issued or which are circulating

within the philippines the power to

issue notes and coins is

under the prerogative of the banco

central

philippines right

safeguards the issue ones of notes and

coins all notes and coins issued by the

central bank shall be the liabilities of

the banks

so they may be issued only against and

in amounts not exiting the total assets

of the bank

uh moreover said notes and coins shall

represent the first and paramount lien

on all assets of the central bank so

essentially

our

these are liabilities on the part of the

central bank

[Music]

however the central bank's holdings of

its own rules and coins shall not be

considered part of its currency issue

and accordingly therefore shall not form

part of the assets or liabilities of the

bank

currency in general circulation

depending on

it shall not be considered as part of

the assets and liabilities of the bank

and printed

in papers

excuse me

all such notes and coins issued by the

central bank and in circulation in the

philippines

enjoy the full guarantee of the

government of the philippines

[Music]

in convertibility of currency

so in order to facilitate business

transactions and to meet the needs of

the various sectors of the economy

central bank shall exchange on demand

and without charge philippine currency

of any denomination

for the nodes and coins

of any other denomination requested

social

philippine currency of any denomination

for the philippine nodes

and coins of any other denomination

requested

is

in cases with the central bank failed to

meet the required denomination it shall

provide notes

and coins of the nomination mostly

approximators requested that is if an

interested party requested for a

thousand one thousand bills and at the

moment it can provide the numbers then

it shall provide notes of 500.

so yeah don't see this happening

replacement of currency and fit for

circulation

mutilated notes and coins

central bank

okay

[Music]

impossible to identify

or

coins that show signs of filing clipping

or perforations being serana

lost more than two over five of their

surface or all of the signature

inscribed there their in should not be

replaced by the central bank

so

two fifths of the surface

okay so allah

bills

the president of the philippines and the

governor of the bangkok central

philippines

because of the mutilation

filing clipping perforation

indianapolis

rather they shall be withdrawn from

circulation and are demonetized without

compensation to the owner or better

unless it can be shown to the

satisfaction of the central bank that

the currency became unfit

for securities as a result of the

accidental causes or forces beyond the

control of the holder

retirement of the notes and the coins

notes now of any cities or denominations

which are more than five years and old

and coins which are more than twelve

years old

so yeah

currency life

bug notes

five years

coins 12 years depending on the

circumstances of

the

paper or the currency

okay

okay

so s

paper

are counted subjected to series of

perforations handed in packets of 100

notes each stamped with a date of

perforation and signed by the

perforator

so men on currency retirement division

these old bills are burned in the in

incinerator once a week under heavy

surveillance with central banks official

security card

as a currency retirement division

central

so there are other trivia

boxes here for your

reading

people power coins

the philippine mean the first mid in the

philippines was established by the royal

decree of e357 the corner of recoletos

and cabildo in intramuros

so this is also for your reading these

are just trivia boxes no

so dito on our presentation we uh

presented um

a new generation currency coins issued

by the previous administration

so this will only

on our currency before we deal on the

business finance per se

so this is also for your reading

security features giant which

and other features of the

new generation papers

and the latest ones are the 1000

peso polymer

the image of the south sea pearl

the tinala

okay

and some of the items here are taken

from

uh

uh illustrations from the internet we're

in uh in identifying obverse and reverse

sides then adding currency nothing

philippine currency

this is only for your

understanding

and if you look our uh book our

reference book mahaba in discussion on

the history of philippine currency

i just wanted you to read

the portions we're on

in specifying monetary standard human

commodity non-commodity standard

human disadvantages

in particular standard

and

human characteristics of that particular

standards because we will not be dealing

i see your name on historical items on

our philippine currency

okay

no i just wanted you to read the

particular history of philippine

currency for us to appreciate because

some of the

items will

be reflected on your

first term exam

now on on what particular regime

you just have to take a note a quick

note on and about maryland's japanese

regime and

yet i want to appreciate

more of that no

suppose

no we will not be uh discussing more of

that casey

this is

business finance the hawala system

the trust or exchange

system is s

assignment posted

history of philippine currency

so i think i have to end the discussion

with you for the history of philippine

currency and this chapter is more of

your reading because

discuss one by one in particular regime

at history of philippine currency this

would be for your reading only thank you