NEW CENTRAL BANK ACT (R.A.

7653)
CHAPTER I  Do and perform any and all things that
ESTABLISHMENT AND ORGANIZATION may be necessary or proper to carry out
OF THE BANGKO SENTRAL NG PILIPINAS the purposes of this Act;
 Acquire and hold such assets and incur
ARTICLE I. CREATION, RESPONSIBILITIES such liabilities in connection with its
AND CORPORATE POWERS OF THE BANGKO operations;
SENTRAL  Condone or release any claim of or
settled liability to the BS, regardless of
Sec. 1. Declaration of Policy the amount involved.
 The State shall maintain a central monetary
authority that shall function and operate as ARTICLE II. THE MONETARY BOARD
an independent and accountable body
corporate in the discharge of its mandated Sec. 6. Composition of the Monetary Board
responsibilities concerning money, banking  The MB, composed of seven members
and credit. appointed by the President of the Philippines
 While being a government-owned for a term of six years:
corporation, it shall enjoy fiscal and  The Governor of the BS, who shall be
administrative autonomy. the Chairman;
 A member of the Cabinet to be
Sec. 3. Responsibility and Primary Objective designated by the President of the
 The BS shall: Philippines;
 Provide policy directions in the areas of  Five members who shall come from the
money, banking, and credit; private sector, all of whom shall serve
 Shall have supervision over the full-time
operations of banks;  The members first appointed, three
 Exercise regulatory powers over the shall have a term of 6 years, and the
operations of finance companies and other two, 3 years.
non-bank financial institutions
performing quasi-banking functions. Sec. 8. Qualifications
 The primary objective of the BS is:  The members of the MB must be:
 Maintain price stability conducive to a  Natural-born citizens of the Philippines;
balanced and sustainable growth of the  At least 35 years of age
economy and employment;  Exception: Governor should at least
 Promote and maintain monetary stability be 40 years of age;
and the convertibility of the peso;  Of good moral character;
 Promote financial stability and closely  Of unquestionable integrity;
work with the National Government;  Of known probity and patriotism;
 Oversee the payment and settlement  With recognized competence in social
systems in the Philippines. and economic disciplines.
Sec. 5. Corporate Powers Sec. 9. Disqualifications
 The BS is hereby authorized to:  As imposed by R.A. 6713
 Adopt, alter, and use a corporate seal  Disqualified from being a director, officer,
which shall be judicially noticed; stockholder of any bank, which is subject to
 Enter into contracts; supervision or examination by the BS.
 Lease or own real and personal property,  Such member shall resign from, and
and to sell or otherwise dispose of the divest himself of any and all interests in
same; such institution before assumption of
 Sue and be sued; office;
 NEW CENTRAL BANK ACT (R.A. 7653)
 Members of the MB coming from the  Meetings may be conducted through modern
private sector shall not hold any other public technologies.
office or public employment during their
tenure; Section 15. Exercise of Authority
 No person shall be a member if he has been  The MB shall:
connected directly with any multilateral  Issue rules and regulations it considers
banking or financial institution or has a necessary for the effective discharge of
substantial interest in any private bank in the the responsibilities and exercise of the
Philippines, one year prior to his powers vested upon them;
appointment;  Direct the management, operations, and
 No member of the MB shall be employed in administration of the BS, reorganize its
any such institution within two years after personnel, and issue such rules and
the expiration of his term. regulations;
 Exception: When he serves as an  Establish a human resource management
official representative of the Philippine system which shall govern the selection,
Government to such institution. hiring, appointment, transfer, promotion,
or dismissal of all personnel;
Sec. 10. Removal  Adopt an annual budget for and
 The President may remove any member of authorize such expenditures by the BS;
the MB for any of the following reasons:  Indemnify its members against all costs
 Subsequently disqualified under the and expenses reasonably incurred by
provisions of Section 8 of this Act; such persons in connection with any
 Physically or mentally incapacitated that civil or criminal action by reason of the
he cannot properly discharge his duties performance of his functions or duties,
and responsibilities and such incapacity unless he is finally judged to be liable
has lasted for more than six months; for willful violation in bad faith or with
 Guilty of acts or operations which are of gross negligence.
fraudulent or illegal character or which
are manifestly opposed to the aims and Sec. 16. Responsibility
interests of the BS;  Sections 38 and 39 of Chapter 9, Book I of
 No longer possesses the qualifications the Revised Administrative Code of 1987
specified. shall apply to the members of the MB;
 Similar responsibility shall apply to
Sec. 11. Meetings members of the MB for:
 MB shall meet at least once a week. The  Disclosure of any information of a
Board may be called to a meeting by the confidential nature
Governor of the BS or by two other  NOTE: Disclosure is in connection
members; with the performance of official
 Presence of four members shall constitute functions;
a quorum  Use of such information for personal
 NOTE: The Governor or his duly gain or to the detriment of the
designated alternate shall be among the Government, the BS or third parties.
four;  NOTE: Any data or information required to
 All decisions of the MB shall require the be submitted to the President and/or the
concurrence of at least four members; Congress shall not be considered
 BS shall maintain and preserve a complete confidential.
record of the proceedings and deliberations
of the MB, either in their original form or in
microfilm;
 NEW CENTRAL BANK ACT (R.A. 7653)
CHAPTER III. THE GOVERNOR AND DEPUTY Sec. 20. Outside Interests of the Governor and the
GOVERNORS OF THE BANGKO SENTRAL Fulltime Members of the Board
 The Governor of the BS and the full-time
Sec. 17. Powers and Duties of the Governor members of the Board shall limit their
 The Governor shall be the chief executive professional activities to those pertaining
officer of the BS. His powers and duties directly to their positions with the BS.
shall be to:  They may not accept any other employment,
 Prepare the agenda for the meetings of whether public or private, remunerated or ad
the MB and to submit for the honorem.
consideration of the Board the policies  Exceptions: (1) Positions in
and measures necessary; eleemosynary, civic, cultural or religious
 Execute and administer the policies and organizations or (2) whenever, by
measures approved by the MB; designation of the President, the
 Direct and supervise the operations and Governor or the full-time member is
internal administration of the BS; tasked to represent the interest of the
 Appoint and fix the remunerations and Government in matters connected with
other emoluments of personnel below or affecting the economy or the financial
the rank of a department head, as well as system of the country.
to impose disciplinary measures upon
personnel of the BS Sec. 21. Deputy Governors
 NOTE: Removal of personnel shall  The Governor of the BS, with the approval
be with the approval of the MB; of the MB, shall appoint not more than five
 Render opinions, decisions, or rulings, Deputy Governors who shall perform
which shall be final and executory until duties as may be assigned to them by the
reversed or modified by the MB; Governor and the Board.
 Exercise such other powers as may be  In the absence of the Governor, a Deputy
vested in him by the MB. Governor shall act as chief executive of the
BS and shall exercise the powers and
Sec. 18. Representation of the Monetary Board perform the duties of the Governor.
and the Bangko Sentral  Whenever the Governor is unable to attend
 The Governor shall be empowered to: meetings of government boards or councils
 Represent the MB and the BS in all in which he is an ex officio member, a
dealings with other offices; Deputy Governor shall be vested with
authority to participate and exercise the right
 Sign contracts entered into by the BS,
to vote in such meetings.
notes and securities issued by the BS, all
reports and other documents of the BS;
ARTICLE IV. OPERATIONS OF THE BANGKO
 Represent the BS in any legal
SENTRAL
proceedings, action or specialized legal
studies;
Sec. 23. Authority to Obtain Data and Information
 Delegate his power to represent the BS  BS shall have the authority to:
to other officers upon his own
 Require any data for statistical and
responsibility.
policy development purposes in relation
 NOTE: In order to preserve the integrity
to the proper discharge of its functions
and the prestige of his office, the Governor
and responsibilities
may choose not to participate in preliminary
 NOTE: Disaggregated data gathered
discussions with any multilateral banking or
are subject to prevailing
financial institution. He may instead be
confidentiality laws;
represented by a permanent negotiator.
 NEW CENTRAL BANK ACT (R.A. 7653)
 Issue a subpoena for the production of arbitrary and made in bad faith and the
the books and records. Those who refuse petitioner files a bond in favor of the BS.
the subpoena without justifiable cause
shall be subject to contempt; Sec. 25-A. Authority to Approve Transfer of
 Data on individual firms, other than banks, Shares
gathered by the BS shall not be made  Transfers or acquisitions of at least 10% of
available to any person or entity outside of the voting shares in banks or quasi-banks
the BS shall require prior approval of the BS.
 Exception: Unless under order of the  In approving such transfers or acquisitions,
court or under such conditions as may be regard shall be given by the BS to the fitness
prescribed by the MB. of the incoming stockholders.
 NOTE: Collective data on firms may be  Transfer or actual control or management of
released to interested persons or the institution to new stockholders prior to
interests. BS approval shall make the transferor liable
under Sections 36 and 37 of this Act.
Sec. 25. Supervision and Examinations
 The BS shall: Sec. 26. Bank Deposits and Investments
 Have supervision over, and conduct  Any director, officer, or stockholder who,
regular or special examinations of together with his related interests, contracts
banking institutions and quasi-banks, a loan or any form of financial
including their subsidiaries and affiliates accommodation from his bank, or from a
engaged in allied activities bank that is:
 Subsidiary- a corporation more  A subsidiary of a bank holding company
than 50% of the voting stock is of which both his bank and the lending
owned by a bank or quasi-bank bank are subsidiaries; or
 Affiliate- a corporation the voting  Controlling proportion of the shares is
stock of which, to the extent of 50% owned by the same interest that owns a
or less, is owned by a bank or quasi- controlling proportion of the shares of
bank; his bank in excess of 5% of the capital
 Have the authority over, and conduct and surplus of the bank.
regular or special examinations of  Such shall be required by the lending bank
entities subject to its jurisdiction; to waive the secrecy of his deposits of
 Establish a mechanism for issues arising whatever nature in all banks in the
from bank examinations. Philippines.
 The department heads and the examiners are  Any information obtained from an
hereby authorized to: examination of his deposits shall be held
 Administer oaths to any director, officer, strictly confidential and may be used by the
or employee of any institution under examiners only in connection with their
their respective supervision; supervisory and examination responsibility
 Compel the presentation of all books, or by the BS in an appropriate legal action.
documents, papers or records relative to
the true condition of any institution Sec. 28. Examination and Fees
under examination;  The supervising and examining department
 No restraining order or injunction shall be head shall examine the operations of every
issued by the court enjoining BS from bank and quasi-bank in accordance with the
examining any institution subject to guidelines set by the MB.
supervision or examination.  NOTE: There shall be an interval of at
 Exception: Unless there is convincing least 12 months between regular
proof that the action of the BS is plainly examinations;
 NEW CENTRAL BANK ACT (R.A. 7653)
 NOTE: The MB, by an affirmative vote  NOTE: The conservatorship is terminated
of at least five members, may authorize a on the ground that the institution can
special examination if circumstances operate on its own, the conservator shall
warrant. receive the balance of the remuneration.
 The institution shall afford to the head of the  NOTE: The conservatorship is terminated
supervising and examining departments full on other grounds, the conservator shall not
opportunity to examine its books and be entitled to such remaining balance.
records, cash and assets and general
condition. Sec. 30. Proceedings in Receivership and
 NOTE: None of the reports relative to Liquidation
such examination shall be open to  Whenever, the MB finds that a bank or
inspection by the public. quasi-bank:
 Supervised institutions shall pay to the BS,  Has been dormant for at least 60 days
no later than May 31 of each year, an or unable to pay its liabilities as they
annual supervision fee as may be prescribed become due in the ordinary course of
by the MB. business;
 NOTE: Extraordinary demands
Sec. 28-A. Bangko Sentral Coordination induced by financial panic shall not
 Suspension or revocation of any government be included.
license of Bangko Sentral-supervised entity  Has insufficient realizable assets cannot
must be done only with prior consultation continue in business without involving
with the BS. probable;
 Losses to its depositors or creditors;
Sec. 29. Appointment of Conservator  Has willfully violated a cease-and-desist
 When the MB finds that a bank or a quasi- order under Section 37 that has become
bank is in a state of continuing inability to final;
maintain a condition of liquidity,  Under Section 29 of this Act shall be final
conservator may be appointed with such and executory, and may not be restrained or
powers as the MB shall: set aside by the court except on petition for
 Deem necessary to take charge of the certiorari on the ground.
assets, liabilities, and the management  Exception: May only be filed by the
thereof; stockholders of record representing the
 Reorganize the management; majority of the capital stock within ten
 Collect all monies and debts due said (10) days from receipt by the BOD
institution;
 Exercise all powers necessary to restore Sec. 33. Disposition of Banking Franchise
its viability.  The BS may:
 Conservator shall:  If public interest so requires
 Be responsible to the MB;  Award to an institution
 Have the power to overrule or revoke  Upon such terms and conditions as the
the actions of the previous management MB may approve
and BOD of the bank or quasi-bank;  NOTE: Such award shall be subject to the
 Be competent and knowledgeable in appropriate exclusive disposition.
bank operations and management;
 Term shall not exceed one year; Sec. 34. Refusal to Make Reports or Permit
 Receive remuneration to be fixed by the Examination
MB in an amount not to exceed two-  Refusal shall be punished by a fine of not
thirds of the salary of the president in less than P50,000 nor more P2,000,000 or
one year. by imprisonment of not less than one year
 NEW CENTRAL BANK ACT (R.A. 7653)
nor more than five years, or both, in the  The MB shall publish and submit the
discretion of the court. following reports to the President and to the
Congress:
Sec. 37. Administrative Sanctions on Banks and  Not later than 90 days after the end of each
Quasi-banks quarter, an analysis of economic and
 The following are administrative sanctions, financial developments;
whenever applicable:  The preceding year's budget and profit and
 Fines in amounts as may be determined loss statement of the BS, within 90 days
by the MB, but in no case to exceed 1 after the end of the year 120 days after the
million pesos for each transactional end of each;
violation or P100,000 per calendar day;  Semester, a review of the state of the
 NOTE: A fine no more than three financial system;
times the profit gained, or loss  Not later than 72 hours after they are taken,
avoided may also be imposed. remedial measures in response to such
 Suspension of rediscounting privileges abnormal movements.
or access to BS credit facilities;
 Suspension of lending or foreign Sec. 40. Annual Report
exchange operations or authority to  Before the end of June of each year, the BS
accept new deposits or make new shall publish and submit to the President and
investments; the Congress an annual report on the
 Suspension of interbank clearing condition of the BS.
privileges;  The annual report shall also include, as a
 Revocation of quasi-banking license. minimum, the following data:
 NOTE: The case should be not finally  The monthly movement of monetary
decided by the BS within a period of 120 aggregates and their components;
days after the date of suspension.  The monthly movement of purchases
 NOTE: That when the delay in the and sales of foreign exchange and of the
disposition of the case is due to the fault, international reserves of the BS;
negligence or petition of the director or  The balance of payments of the
officer, the period of delay shall not be Philippines;
counted in computing the period of  Monthly indices of consumer prices and
suspension. of import and export prices;
 The monthly movement, in summary
Sec. 38-A. Issuance of Injunctive Relief against form, of exports and imports, by volume
Bangko Sentral Actions and value;
 The Court of Appeals and Supreme Court  The monthly movement of the accounts
shall be the only courts who will issue any of the BS and of other banks;
temporary restraining order, preliminary  The principal data on government
injunction or mandatory. receipts and expenditures and on the
status of the public debt, both domestic
ARTICLE V. REPORTS AND PUBLICATIONS and foreign; and
 The texts of the major legal and
Sec. 39. Reports and Publications
administrative measures.
 The BS shall publish a general balance
sheet showing the volume and composition
Sec. 41. Signatures on Statements
of its assets and liabilities as of the last
 The balance sheets and other financial
working day of the month within 90 days
statements of the BS shall be signed by the:
after the end of each month.
 Officers responsible for their
preparation;
 NEW CENTRAL BANK ACT (R.A. 7653)
 Governor;  Authorized to appoint a representative
 Auditor of the BS. who shall be the auditor
 Wherein representative must be:
ARTICLE VI. PROFITS, LOSSES, AND a. A Certified Public Accountant
SPECIAL ACCOUNTS with at least ten years’
experience
Sec. 43. Computation of Profits and Losses b. No relative member within the
 Net profits or losses shall determine within sixth degree of consanguinity
the first 60 days at the end of each year.
 Calculation of net profits shall have CHAPTER II
adequate allowance or reserves for bad and THE BANGKO SENTRAL AND THE MEANS
doubtful accounts. OF PAYMENT

Sec. 43-A. Reserves Fund ARTICLE I. THE UNIT OF MONETARY VALUE

 The BS shall establish reserve fund
whenever it has income or positive surplus. Sec. 48. The Peso
Which shall consist:  Defines as the unit of monetary value in
 Fluctuation reserve the Philippines is the "peso," which is
 Contingency reserve represented by the sign "P."
 Other reserves necessary  The peso is divided into 100 equal parts
called "centavos," which are represented by
Sec. 44. Distribution of Net Profits the sign "c."
 Within the first 60 days following the end of
each fiscal year, the MB shall determine and ARTICLE II. ISSUE OF MEANS OF PAYMENT
carry out the distribution of the net profits:
 50% of the net profits shall be carried to A. CURRENCY
surplus
 Remaining 50% shall revert back to the Sec. 49. Currency
National Treasury  Meaning all Philippine notes and coins
 Exception: Included in the transitory issued or circulating in accordance with the
provisions of this Act. provisions of this Act.

Sec. 46. Suspense Accounts Sec. 50. Exclusive Issue Power

 The Monetary Adjustment Account (MAA)  The BS shall have the sole power and
and the Exchange Stabilization Adjustment authority to issue currency, within the
Account (ESAA) are repealed. territory of the Philippines.
 Revaluation of International Reserve (RIR)
accounts shall continue to be for the account Sec. 51. Liability for Notes and Coins
of the same entity and shall be governed by  May be issued only against, and in amounts
the provisions of Section 44 of Republic Act not exceeding, the assets of the BS. Said
No. 265. notes and coins shall be a first and
paramount lien on all assets of the BS.
ARTICLE VII. THE AUDITOR
Sec. 52. Legal Tender Power
Sec. 47. Appointment and Personnel  Shall be fully guaranteed by the Government
 The Chairman of the Commission on Audit of the Republic of the Philippines and shall
shall: be legal tender in the Philippines for all
debts.
 Act as the ex officio auditor of the
BS;
 NEW CENTRAL BANK ACT (R.A. 7653)
 NOTE: P50 for denominations of twenty- CHAPTER III
five centavos and above, and, P20 for GUIDING PRINCIPLES OF MONETARY
denominations of ten centavos or less. ADMINISTRATION BY THE BANGKO
SENTRAL

Sec. 53. Characteristics of the Currency

 Said notes shall:
 Bear the signatures in facsimile, of the ARTICLE I. DOMESTIC MONETARY
President of the Philippines and of the
Governor of the BS; Sec. 63. Action When Abnormal Movements
 Prescribe the weight, fineness, designs, Occur in the Monetary Aggregates, Credit, or
and denominations Price Level
 The MB shall:
Sec. 55. Interconvertibility of Currency  Take such remedial measure;
 The BS shall exchange, on demand and  Submit to the President of the
without charge, Philippine currency of any Philippines, and the congress, detailed
denomination for Philippine notes and coins report (Minimum, description, analysis)
of any other denomination requested.  Causes of the rise or fall;
 Changes in the monetary aggregates,
Sec. 56. Replacement of Currency Unfit for credit, prices;
Circulation  Measures of the MB and other
 The BS shall withdraw from circulation and measures.
shall demonetize all notes and coins which  The MB shall submit the reports mentioned
for any reason whatsoever are unfit for in this section, and shall state the opinion of
circulation and shall replace them by the board the changes.
adequate notes and coins.  Cost of living increases by more than
 The BS shall not replace: 10%.
 Coins which show signs of filing,
clipping or perforation; ARTICLE II. INTERNATIONAL MONETARY
 Notes which have lost more than two- STABILIZATION
fifths of their surface in such mutilated
condition. Sec. 65. International Reserves
 The BS shall maintain international reserves
B. DEMAND DEPOSITS adequate to meet any foreseeable net
demands on the BS for foreign currencies.
Sec. 58. Definition  The Board shall give special attention:
 Liabilities of the BS and of other banks (Volume and maturity)
which are denominated in Philippine  The BS’s own liabilities in foreign
currency and are subject to payment in legal currencies;
tender upon demand by the presentation of  Foreign exchange assets and liabilities of
checks. other banks in the Philippines;
 Foreign exchange assets and liabilities of
Sec. 60. Legal Character all other persons and entities in the
 Checks representing demand deposits Philippines.
 Do not have legal tender power
 Acceptance in the payment of debts, Sec. 66. Composition of the International
public and private, at the option of Reserves.
creditor.  May include but shall not be limited to the
following assets:
 NEW CENTRAL BANK ACT (R.A. 7653)
 Gold; ARTICLE II. OPERATIONS IN GOLD AND
 Assets in foreign currencies: FOREIGN EXCHANGE
 Documents and instruments;
 Demand and time deposits; Sec. 69. Purchases and Sales of Gold
 Treasuries and commercial banks  The BS may buy and sell gold in any form.
abroad;  Made in the national currency at the
 Foreign government securities; prevailing international market price.
 Foreign notes and coins;
Sec. 70. Purchases and Sales of Foreign
Exchange
Sec. 67. Action When the International Stability of  The BS may buy and sell foreign notes and
the Peso Is Threatened. coins
 When the international reserve of the BS:  Documents and instruments of types
 Falls to a level which the MB considers customarily employed for the international
inadequate to meet the prospective net transfer of funds.
demands;  The BS may engage in foreign exchange
 Imminent danger of falling to such a transactions:
level;  Banking institutions;
 Falling as a result of payments or  The government (Political subdivisions
remittances abroad and instrumentalities.);
 The MB shall:  Foreign or international financial
 Take remedial measures institutions;
 Submit to the President of the  Foreign governments and their
Philippines the detailed report: instrumentalities;
 Nature and causes of decline;  other entities or persons which the MB is
 Remedial measures already taken; hereby empowered to authorize as
 Monetary, fiscal or administrative foreign exchange dealer.
measures further proposed;  NOTE: In order to maintain the
 Character and extent of the convertibility of the peso BS at the request
cooperation. of any banking institution operating in the
 NOTE: The MB shall propose to the Philippines:
President, with appropriate notice to  Buy any quantity of foreign exchange
Congress, such additional action as it deems offered;
necessary to restore equilibrium in the  Sell any quantity of foreign exchange
international balance of payments of the demanded by such institution.
Philippines: REMEMBER: Foreign currencies offered or
 Resultant actions fail to check the demanded are freely convertible into gold or United
deterioration of the reserve position of States dollars but shall not apply to demands for
the BS. foreign notes and coins.
 Deterioration cannot be checked except
by chronic restrictions on exchange and Sec. 71. Foreign Asset Position of the Bangko
trade transactions or by sacrifice of the Sentral
domestic objectives of a balanced and  Maintain at all times a net foreign asset
sustainable growth of the economy. position.
 If an equivalent amount in pesos of the
CHAPTER IV foreign exchange liabilities of the BS exceed
INSTRUMENTS OF BANGKO SENTRAL twice the equivalent amount in pesos of the
ACTION foreign exchange assets of the bank.
 NEW CENTRAL BANK ACT (R.A. 7653)
 The BS shall, within 60 days from the date  In order to adjust their currency positions,
the limit is exceeded, submit a report to the banks shall be granted a reasonable period of
Congress stating the origin of these liability time.
and the manner in which they will be paid.
Sec. 79. Other Exchange Profits and Losses
Sec. 72 Emergency Restrictions on Exchange  The banks shall bear the risks of:
Operations  Noncompliance with the terms of the
 The concurrence of at least five of its foreign exchange documents and
members; instruments
 Approval of the President of the Philippines;  Any other typically commercial or
 Temporarily suspend or restrict sales of banking risks
exchange by the BS;
 Foreign exchange be delivered to the BS or ARTICLE IV. LOANS TO BANKING AND
any bank or entity operating in the OTHER FINANCIAL INSTITUTIONS
Philippines.
A. CREDIT POLICY
Sec. 74. Exchange Rates.
 The MB shall: Sec. 81. Guiding Principles
 Determine the exchange rate policy of  Rediscounts, discounts, loans and advances,
the country; shall be used to influence the volume of
 Determine the rates at which the BS credit consistent with the objective of price
shall buy and sell spot exchange; stability and maintenance of financial
 Establish deviation limits from the stability.
effective exchange rate or rates as it may
deem proper; B. NORMAL CREDIT OPERATIONS
 Determine the rates for other types of
foreign exchange transactions by the BS. Sec. 82. Authorized Types of Operations
 Commercial credits- maturities of not
ARTICLE III. REGULATION OF FOREIGN more than 180 days from the date of their
EXCHANGE OPERATIONS OF THE BANKS rediscount, discount or acquisition by the BS
and resulting from transactions related to:
Sec. 76. Foreign Exchange Holdings of the Banks  Importation, exportation, purchase or
 The MB may require the banks to sell to the sale of readily saleable goods and
BS or to other banks all or part of their products, or their transportation within
surplus holdings of foreign exchange. the Philippines;
 The MB may, whenever warranted:  Storing of nonperishable goods and
 Determine the net assets and net product
liabilities of banks;  Production credits- maturities of not more
 Take into account the bank's net worth, 360 days from the date of their rediscount,
outstanding liabilities, actual and discount or acquisition by the BS and
contingent, or such other financial or resulting from transactions related to:
performance ratios.  Production or processing of agricultural,
animal, mineral, or industrial products.
Sec. 77. Requirement of Balanced Currency  NOTE: If the original loan granted is
Position secured by a lien or mortgage on real
 The MB may require the banks to maintain a estate property 70% of the appraised
balanced position between their assets and value of which equals or exceeds the
liabilities in Philippine pesos or any other amount of the loan granted, products
currencies.
 NEW CENTRAL BANK ACT (R.A. 7653)
need not be pledged to secure the  NOTE: Disbursed in two or more tranches:
documents.  Limited to 25% of the total deposit and
 Other credits- Special credits that are Not deposit substitutes of the institution.
rediscountable under the immediately  It shall be secured by:
preceding subsections (a) and (b) may be  Government securities;
eligible for rediscounting in accordance with  Acceptable guarantees backed up by
rules and regulations which the BS shall the national government or its
prescribe. securities;
 Advances- Not exceed one 180 days:  Other encumbered first-class
 Gold coins or bullion; collaterals;
 Securities consisting obligations;  Other kinds of collateral.
 Credit instruments, reference is made in REMEMBER: If circumstances
subsection (a) of this section; surrounding the emergency warrant a loan or
 Credit instruments, reference is made in advance greater than the amount provided,
subsection (b) of this section; the first tranche may exceed 25%.
 Utilized portions of advances in current  The banking institution shall submit to
account covered by regular overdraft the BS a resolution of its board of
agreements; directors authorizing the BS to evaluate
 Negotiable treasury bills, certificates of other assets of the banking institution.
indebtedness, notes and other negotiable  The MB may, by a vote of at least five of
obligations, maturing within three years its members, authorize the release of a
from the date of the advance; subsequent tranche on condition that the
 Negotiable bonds, maturities of not principal stockholders of the institution:
more than 10 years from the date of the  Furnish an acceptable undertaking
advance.  Provide acceptable security
 NOTE: Advances made against the  NOTE: BS acquires any of the shares it has
collateral named in clauses (6) and (7) of accepted as collateral as a result of
subsection (d) of this section may not foreclosure proceedings, the BS shall
exceed 80% of the current market value of dispose of said shares by public bidding
the collateral. within one 1 year from the date of
consolidation of title by the BS.
C. SPECIAL CREDIT OPERATION
E. CREDIT TERMS
Sec. 83. Loans for Liquidity Purposes.
 Extend loans and advances not more than 7 Sec. 85. Interest and Rediscount Rates
days without any collateral  Collection of interest and other appropriate
charges on all loans and advances extended
D. EMERGENCY CREDIT OPERATION despite the closure, receivership or
liquidation of the debtor-institution
Sec. 84. Emergency Loans and Advances.  Shall be applied to all banks of the same
 The MB may, by a vote of at least five of its category uniformly and without
members. discrimination
 Normal periods, for the purpose of assisting
a bank in a precarious financial condition or Sec. 86. Endorsement – Sec. 87. Repayment of
under serious financial pressures brought by Credits
unforeseen events.  Documents rediscounted, discounted, bought
 NOTE: The amount of emergency loan or or accepted as collateral by the BS
advance shall not exceed the sum of 50%
of total deposits
 NEW CENTRAL BANK ACT (R.A. 7653)
 Shall bear the endorsement of the institution  Freely Negotiable;
from which they are received (Sec. 86:  Regularly Serviced;
Endorsement)  Available to the General Public;
 Must be withdrawn on the dates of their  In denominations of a thousand pesos
maturities, or upon liquidation of the or more.
obligations they represented (Sec. 87:
Repayment of Credits) Sec. 92. Issue and Negotiation of BS Obligations
 NOTE: Banks shall have the right at any time  The BS may issue, place, buy and sell freely
to withdraw any documents which they have negotiable evidences of indebtedness.
presented to the BS as collateral, upon  Issuance of such shall be made only in cases
payment in full of the corresponding debt to of extraordinary movement in price levels.
the BS, including interest charges  Acquiring of such may be done before their
maturity, shall not be included among its
Sec. 88. Other Requirements assets, and shall be immediately retired or
 Additional conditions which borrowing cancelled.
institutions must satisfy in order to have
access to the credit of the BS ARTICLE VI. COMPOSITION OF BANGKO
 May refer to the rates of interest charged by SENTRAL’S PORTFOLIO
the banks
Sec. 93. Review of the BS Portfolio
Sec. 89. Provisional Advances to the National  Shall be done by the MB in relation to its
Government future credit policy once every month
 Said advances shall be repaid before the end  Whether a sufficiently large part of the
of three months extendible by another portfolio consists of assets with early
three months as the MB may allow maturities is given much consideration
 Shall not exceed 20% of the average annual
income of the borrower for the last three ARTICLE VII. BANK RESERVES
preceding fiscal years.
Sec. 94. Reserve Requirements
ARTICLE V. OPEN MARKET OPERATIONS  Shall be proportional to the volume of its
FOR THE ACCOUNT OF THE BANGKO deposit liabilities
SENTRAL  Shall ordinarily take the form of a deposit
 Deposits and deposit substitutes with
Sec. 90. Principles of Open Market Operations remaining maturities of two or more years
 The open market purchases and sales of and interbank borrowings may be exempt
securities by the BS shall be made from reserve requirements
exclusively in accordance with its primary
objective of achieving price stability. Sec. 95. Definition of Deposit Substitutes
 An alternative form of obtaining funds from
Sec. 91. Purchases and Sales of Government the public, other than deposits, through the
Securities issuance, endorsement, or acceptance of debt
 The BS may buy and sell in the open market instruments for the borrower's own account.
for its own account evidences of  May include, but not limited to, banker’s
indebtedness issued by the: acceptances, promissory notes,
 Government of the Philippines/Political participations, certificates of assignment and
Subdivisions similar instruments with recourse, and
 Government Instrumentalities and fully repurchase agreements.
guaranteed by the Government  Deposit substitutes of commercial, industrial
 Evidences of Indebtedness must be: and other nonfinancial companies issued for
 NEW CENTRAL BANK ACT (R.A. 7653)
the limited purpose of financing their own  Required to pay the penalty only on the
needs or the needs of their agents or dealers average daily deficiency during the week
shall not be covered.  If a bank or quasi-bank chronically has a
reserve deficiency, the MB may:
Sec. 96. Required Reserves Against Peso Deposits  Limit or prohibit the making of new
 The MB may fix and alter the minimum loans or investments
reserve ratios to peso deposits, as well as to  Require that part or all of the net profits
deposit substitutes. of the institution be assigned to surplus

Sec. 97. Required Reserves Against Foreign Sec. 102. Interbank Settlement
Currency  Facilities for interbank clearing – may
 The MB is authorized to prescribe and charge administrative and other fees for the
modify the minimum reserve ratios maintenance of such facilities.
applicable to deposits denominated in  Any bank which incurs on overdrawing in
foreign currencies. its deposit account with the BS shall fully
cover said overdraft, including interest
Sec. 98. Reserves Against Unused Balances of thereon, whichever is higher and not later
Overdraft than the next clearing day:
 The MB may establish minimum reserve  At a rate equivalent to one-tenth of one
requirements for unused balances of percent per day
overdraft lines.  Prevailing 91-day treasury bill rate plus
 The power to do so shall be the same as its three percentage points
powers with respect to reserve requirements  Settlement of clearing balances shall not be
against demand deposits. effected for any account which continues to
be overdrawn for five consecutive banking
Sec. 99. Increase in Reserve Requirements days.
 Increases shall be made in a gradual manner
and shall not exceed four percentage points Sec. 103. Exemption from Attachment and Other
in any 30-day period. Purposes
 Exempt from attachment, garnishment, or
Sec. 100. Computation on Reserves any other order or process of any court,
 Daily calculation is based on the amount of government agency or any other
the institution’s reserves and the amount of administrative body issued
its liability accounts against which reserves
are required to be maintained. ARTICLE VIII. SELECTIVE REGULATION OF
BANK OPERATIONS
Sec. 101. Reserve Deficiencies
 Applicable when the reserve position is Sec. 104. Guiding Principle
below the required minimum  Ensure that the supply, availability and cost
 A payment of one-tenth of one percent per of money are in accord with the needs of the
day on the amount of the deficiency or the Philippine economy
prevailing ninety-one-day treasury bill rate  Bank credit is not granted for speculative
plus three percentage points, whichever is purposes prejudicial to the national interests
higher
 That banks and quasi-banks shall be: Sec. 105. Margin Requirements Against Letters of
 Permitted to offset any reserve Credit
deficiency occurring on one or more  Prescribe minimum cash margins for the
days of the week with any excess opening of letters of credit
reserves
 NEW CENTRAL BANK ACT (R.A. 7653)
 May relate the size of the required margin to  The BS shall act as a banker of the
the nature of the transaction to be financed Government, its political subdivisions and
instrumentalities
Sec. 106. Required Security Against Bank Loans
 May issue such regulations as it may deem Sec. 111. Representation with the International
necessary with respect to the maximum Monetary Fund
permissible maturities of the loans and  The BS shall represent the Government in
investments which the banks may make, and all dealings, negotiations and transactions
the kind and amount of security to be with the International Monetary Fund
required against the various types of credit  Shall carry such accounts as may result from
operations of the banks Philippine membership in, or operations
with, said Fund

Sec. 112. Representation with Other Financial

Sec. 107. Portfolio Ceilings Institutions
 Upper limit on the amount of loans and  The BS may be authorized by the
investments which the banks may hold Government to represent it in dealings,
 A limit on the rate of increase of such assets negotiations or transactions with the
within specified periods of time International Bank for Reconstruction and
Development and with other foreign or
Sec. 108. Minimum Capital Ratios international financial institutions or
 The capital and surplus of the bank must agencies
bear to the volume of their assets  The President may, however, designate any
 May alter said ratios whenever it deems of his other financial advisors to jointly
necessary represent the Government in such dealings,
negotiations or transactions.
ARTICLE IX. COORDINATION OF CREDIT
POLICIES BY GOVERNMENT INSTITUTIONS Sec. 113. Official Deposits
 The BS shall serve as the official depository
Sec. 109. Coordination of Credit Policies of the Government.
 Government-owned corporations which  GENERAL POLICY:
perform banking or credit functions shall  A minimum working cash balances shall
coordinate their general credit policies with only be deposited to the BS
those of the MB.  Held by government-owned banks and
 Make suggestions or recommendations to other banks incorporated in the
such corporations for the more effective Philippines
coordination of their policies with those of
the BS. Sec. 114. Fiscal Operations
 Fiscal Operation- is a decision taken to
CHAPTER V implement a budgetary policy. A general
FUNCTIONS AS BANKER AND FINANCIAL cash account is where liquid funds of the
ADVISOR OF THE GOVERNMENT Government shall be deposited and use by
the Treasurer of the Philippines.
ARTICLE I. FUNCTIONS AS BANKER OF THE  NOTE: An order from the Treasurer of the
GOVERNMENT Philippines is needed to be able to transfer
funds from the general cash account to other
Sec. 110. Designation of Bangko Sentral as accounts.
Banker of the Government
 NEW CENTRAL BANK ACT (R.A. 7653)
Sec. 115. Other Banks as Agents of the Bangko  Purpose: to increase the liquidity and
Sentral stabilize the value of said securities.
 The BS may engage the services of other  Reason of using the resources of the Fund:
government-owned and controlled banks  To prevent/moderate sharp fluctuations
and other domestic banks as well as the of the government obligations.
services in foreign countries such as:
 Foreign Banking and Sec. 122. Profits and Losses of the Fund
 Financial Institution as fiscal agents.  Profits may arise from:
 Capital gains
Sec. 116. Remuneration for Services  Interest earnings
 Service renders to the Government, political  NOTE: Securities Stabilization Fund shall
subdivision and instrumentalities is subject retain net profits and the Fund is subject to
to charging: any net losses which may incur.
 equitable rates,
 commissions; or ARTICLE III. FUNCTIONS AS FINANCIAL
 fees for the service rendered. ADVISOR OF THE GOVERNMENT

ARTICLE II. THE MARKETING AND Sec. 123. Financial Advice on Official Credit
STABILIZATION OF SECURITIES FOR THE Operations
ACCOUNT OF THE GOVERNMENT  Before undertaking credit operation Abroad,
the Government:
A. THE ISSUE AND PLACING OF  Through the Secretary of finance shall
GOVERNMENT SECURITIES request the opinion, in writing of the MB
contemplated action.
Sec. 117. Issue of Government Obligations  The opinions must similarly be requested
 The BS may act as an agent for issuing by all political subdivisions and
securities which represent as government instrumentalities of the Government
obligations. before undertaking the credit operation.
 The MB’s opinion shall base on the gold and
Sec. 118. Methods of Placing Government foreign exchange resources and obligations
Securities of the nation and on the effects of the
 The BS may: proposed operation.
 Place the securities through direct sale to  Prior opinion shall be requested in order that
financial institution and the public; Board may render opinion on the probable
 Not a member of any stock exchange or effects of the following:
syndicate’  Monetary aggregates
 Reimburse expenses incurred in placing  Price level
the securities from the government, or  Balance payment
political subdivision.  NOTE: No prior MB opinion shall be
required for individual drawdowns or
B. BANGKO SENTRAL SUPPORT OF THE borrowings within approved credit lines.
GOVERNMENT SECURITIES MARKET
Sec. 124. Representation on the National
Sec. 120. The Securities Stabilization Fund Economic and Development Authority
 Operations of S.S.F. consist of:  Deputy Governor shall be an ex officio
 Purchases and sales member of the National Economic and
 In the Open market, of Bonds Development Authority of the Board.
 Other evidences of indebtedness
CHAPTER VI
 NEW CENTRAL BANK ACT (R.A. 7653)
PRIVILEGES AND PROHIBITIONS  Equipment for note production,
minting of coins, metal refining and
ARTICLE I. PRIVILEGES for security printing operations shall
be fully exempt from all customs
Sec. 125. Tax Exemptions duties and regular fees and other
 The BS shall be exempt for a period of five taxes, assessments and charges
years from the approval of this Act from all related to importations or
national, provincial, municipal and city exportation.
taxes, fees, charges and assessments.
 Where Exemptions to Authorized Sec. 127. Applicability of the Civil Service Law
Representative Apply:  General Purpose: to insure and promote the
 All property of the BS; constitutional mandate regarding
 Resources; appointments only according to merit and
 Receipts; fitness, and to provide within the public
 Expenditures; service a progressive system of personnel
 Profits and income of the BS; administration to insure the maintenance of
 Contracts and deeds; an honest, efficient, progressive and
courteous civil service in the Philippines.
 Documents and transaction related to the
(Sec 2. R.A 2260)
conduct of the business.
 Appointments in the BS, shall be made only
 When BS is liable, exemptions apply only:
according to the Civil Service Law and
 Taxes;
regulations.
 Fees;
 Exceptions: (1) Those policy-
 Charges; determining; (2) confidential; (3) highly
 Assessments. technical in nature
 NOTE: The exemptions shall not  The MB or Governor may appoint personnel
apply if persons or other entities are in the BS without the prior approval of
doing business with the BS. government agency to not disrupt the
 Provided, further, that foreign loans and operations of the BS if the services are
other obligations of the BS shall be exempt, deemed necessary.
both as to principal and interest, from any
and all taxes if the payment of such taxes ARTICLE II. PROHIBITIONS
has been assumed by the BS.
Sec. 128. Prohibitions
Sec. 126. Exemption from Customs Duties  The BS shall not:
 Custom Duties- refers when there is import  Acquire shares of any kind or accept
or exportation of goods there is tax imposed them as collateral,
as it is transported across international
 Participate in the ownership or
borders.
management of any enterprise.
 Importations into the Philippines are subject
 Engage in development banking or
to customs duties and taxes unless there is a
financing, however, the outstanding
specific legal basis for exemption from
loans obtained or extended for
duties and/or taxes.
development financing shall not be
 Exception: When the BS importation
affected by the prohibition.
and exportation is needed for the
operation of the bank such as:
CHAPTER VII TRANSITORY PROVISIONS
 Notes;
 Coins;
SEC. 129. Phase-out of Fiscal Agency Functions
 Gold and other metals
 NEW CENTRAL BANK ACT (R.A. 7653)
 The BS shall phase-out all fiscal agency  NOTE: All actions taken by the Bangko
functions: Sentral Monetary Board under this section
 Within a period of three years and not shall be reported to Congress and the
exceeding five years President within 30 days.
 Should be approved by the Congress
Oversight Committee. SEC. 133. Mandate to Organize
 No preferential or priority right shall be
Sec. 130. Phase-out of Regulatory Powers Over given to any personnel
the Operations of Finance Corporations and  Personnel have no prior or vested rights
Other Institutions Performing Similar Functions even he incumbent similar position prior to
 The BS shall, within a period of five years organization.
from the effectivity of this Act, phase out its  NOTE: The formulation of the program of
regulatory powers over finance companies organization shall be completed within six
without quasi-banking functions and other months after the effectivity of this Act, and
institutions performing similar functions. shall be fully implemented within a period
of six months thereafter
Sec. 131. Implementing Details
 BS shall be operational by the performance SEC. 134. Separation Benefits
through these acts:  The MB is authorized to provide separation
 Appointing members within 60 days incentives, and all those who shall retire or
after effectivity of this Act be separated from the service on account of
 Transfer of asset and liabilities from the reorganization.
Central Bank to the BS shall be
completed within 90 days from the SEC. 136. Transfer of Powers
constitution of the MB.  All powers, duties and functions vested by
law in the Central Bank of the Philippines
Sec. 132. Transfer of Assets and Liabilities not inconsistent with the provisions of this
 Three members of the MB, shall determine Act shall be deemed transferred to the
the assets and liabilities of the Central Bank Bangko Sentral ng Pilipinas.
which may be transferred.
 Guidelines:
 The MB and the Secretary of Finance
shall have primary responsibility
 Creative monetary
 Financial solution.
 The BS shall remit 75% of its net profits
to:
 Special deposit account or,
 National Treasury.
 Transfer shall be limited to an amount
that will enable the BS to perform its
responsibilities adequately.
 Liabilities to be assumed by the BS shall
include liability for notes and coins in
circulation.
 Any asset or liability of the Central Bank
not transferred to the BS shall be
retained and administered, disposed of
and liquidated by the Central Bank.