CHAPTER 7

Bangko Sentral ng Pilipinas (BSP) Autonomous entity, not like the other government entities Regulatory authority that has supervision over banks Needs to be separate because it has regulatory authority and supervision over all banks and financial institutions Main function maintain monetary and crisis stability Similar powers to a corporationCorporate powers of the BSP [SCP SPAL]1. Use Corporate Seal2. Enter Contracts3. Lease or own personal and real Property and may dispose the same4. Sue and be sued5. Perform any thing that may be necessary to carry out purpose of NCBA 6. Acquire and hold assets and incur liabilities in connection with NCBA7. Comprise or release claim or settled Liability to BSP regardless of amount involved. Its salary is not under the Civil Service commission Can do circulars, policies, rules that govern banks and all entities engaged in financial transactions In the creation of a Bank, the monetary board is the one who issues the license for any group of persons to be organized as a bank In charge of monitoring price stability in cases of inflation, recession and other financial transactions Manned by people with a track record for honesty, integrity Policy making is entrusted to the Monetary Board Main task to supervise; watchdog of the depositors

Monetary Board (MB) Not composed by people from the government Exception: Secretary of Finance Members are composed of those from the private sector Purpose To shield the entity from influences from government people Highest policy-making body in the BSP Manual of Regulations all rules and regulations for financial institutions Compilation of the things which need to be complied with by banks Functions

Role of the BSP in cases the bank becomes insolvent or on the verge of collapse Bankruptcy need to appoint a conservator/ receiver Case of Bangko Filipino The bank is on the verge insolvency when they cant anymore entertain withdrawal of depositors, indications that the assets are not sufficient to satisfy liabilities Bank and depositors creditor-debtor relationship Close Now, Hear Later scheme Indications that the bank is on the verge of insolvency(?) report to the MB All the officers from top to bottom will be replaced by a conservator Conservator takes charge of the total management of the bank; given freedom by the BSP to rehabilitate the bank Why are banks being examined regularly by the BSP? To see to it if they are doing their job in accordance with the Manual of Regulations Banking business is vested with public interest Mediator/ intervenor between insolvent banks and buyer banks

CHAPTER 8

BSP power to issue money (legal tender)

What makes money a legal tender? Bills and coins are backed up by gold reserves in custody of the BSP Gold is the most precious commodity Job of the BSP to monitor Money must be aligned with the reserves in custody of the BSP

Role of the BSP vis--vis gold reserves Banker of the government Main lender of money BSP can lend money to banks in order for them to stabilize Father of all banks you dont want the son to die

Main function of BSP Examining and regulating all the functions of the bank

CHAPTER 9

Unclaimed Balances Law (RA 3936) Person has money in the bank and the money is not moving for 10 years (dormant) Bank send notices to the depositors (no deposit for the past 9 years) Bank: Buhay pa kaya iyong depositor na ito? No one claims the deposit Send report to BSP BSP to report to OSG to initiate escheat proceeding to get unclaimed money Owner of unclaimed money government

Trust receipts Study how letter of credit operates Independence principle