money& monetary policy defined (philippine setting)

Money&

Monetary Policy

Cmrmiranda PowerPoint Presentation November2011 Macro

Economics

WHAT IS MONEY?Money can be defined as an object that is

readily accepted from anybody as full payment for purchase of a certain commodity or for service rendered by an individual. This may take the form of metal coins, paper money issued by the government, banks or personal checks.


Economics

HOW DID MONEY COME INTO USE?

Barter System- the direct exchange of goods for goods, services for services, goods for services and services for goods. It is the earliest system of trading.

With the passage of time, the barter system presented difficulties which tended to slow down exchange. This lead to the use of one object as a medium of exchange for other goods came into use. This system can be known as Money Economy.


Economics

DISADVANTAGES OF BARTER SYSTEM

1. Burdensome

2. Inconvenient due to difficulty in finding goods which one directly needs.

3. Does not have proper measure for the goods being exchanged.

4. Indivisibility of some goods


Economics

DIFFERENT FORMS OF MONEY

1. Commodity Money

2. Metallic Money

3. Representative Money

4. Paper Money

5. Bank Drafts or Checks


Economics

CHARACTERISTICS OF MONEY• It must be portable.

• It must be homogenous.

• It must be durable.

• It must be recognizable.

• It must be divisible.

• It must be malleable.

• It must possess general acceptability.

• It must have elasticity of supply.

• It must be stable in value.


Economics

WHY IS MONEY IMPORTANT?There are many uses or functions of money and these are

money as a:

Medium of Exchange. The money is the medium of exchange because it is always in the middle between the buyer and the seller.

Standard Value. This is being performed when all articles or services are given a value in terms of a certain number of units of one particular type of goods.

Standard for Postponed Payments.

Store of Value. It becomes a store value when an amount of it is kept for a period of time.


Economics

DIFFERENT MONETARY STANDARDS

MONETARY STANDARDS

The Monetary UnitThis refers to the type of money expressed by

law as the standard value and the circulating medium. It is made of a particular metal or commodity with a fixed weight and fineness.

The System of CoinageThe government has undertaken sole

responsibility for the manufacture of metals into coins to avoid difficulties such as varied sizes and shapes, designs, weights and counterfeiting.

Circulating MediaAll matters related to the issuance, value,

conversion and control in the use of paper bills or metallic coins are spelled out by the law


Economics

Monetary ReservesImportant in controlling credits. The

security of the depositors and as an instrument of control by the government in cases of economic instability due to too much credit or to an imbalance in foreign payments.

Local Tender Quality Money

*Legal Money Tender- a money which is declared by the law as acceptable for payment of debts, both public and private.


Economics

COMMODITY STANDARDS

Monometallism. A commodity standard based on one metal.

Bimetallism. Based on two metals which are standard money at a fixed value in terms of one another.

Symmetalism. Based on a single metallic unit which is a mixture of different metals legally proportioned.

Composite Commodity / Commodity Reserve Standard. Still on the planning stage consists of an assorted list of staple commodities which will serve as the standard unit.

Has several types namely;


Economics

PAPER STANDARD

The paper standard is one which does not use gold or any metal as the basis of value. This is also called as Credit or Fiduciary Standard because it is dependent on the people’s trust in the government.

*Flat Standard because the money circulation assumes its value by decree of the government.

*Money Paper Standard because the government supervises the circulation of the money to the public.


Economics

PHILIPPINE`S PRESENT MONETARY SYSTEM

The Central Bank of the Philippines is chiefly responsible for the implementation of our monetary policy and is the sole authority on money matters as embodied in the Section 2, Articles of the Amended Republic Act 265. It regulates the circulation of money in order to help trade and industry meet their needs. It is the only agency which can issue money in the Philippines and is responsible for maintaining the stability of peso so it will always be accepted within and outside the country as a medium of exchange.


Economics

PHILIPPINE CURRENCY

ESO


Economics

MONETARY POLICY

Monetary Policy can be defined as set of guidelines and plans of action designed to achieve stability and reliability of the financial system so that it automatically responds and adjusts to the changes and dynamics of an economy.


Economics

OBJECTIVE OF THE MONETARY POLICY

The primary objective of the monetary policy is to provide financial stability that promotes growth and development of the economy with minimal inflation.The success indicator of monetary policy is the rate of inflation in lower result.


Economics

money& monetary policy defined (philippine setting)

Education