AN ACT ESTABLISHING THE CENTRAL BANK OF THE
PHILIPPINES, DEFINING ITS POWERS IN THE ADMINISTRATION OF THE MONETARY AND
BANKING SYSTEM, AMENDING THE PERTINENT PROVISIONS OF THE ADMINISTRATIVE CODE
WITH RESPECT TO THE CURRENCY AND THE BUREAU OF BANKING, AND FOR OTHER
PURPOSES.
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress assembled:
CHAPTER I.—ESTABLISHMENT AND ORGANIZATION THE CENTRAL
BANK OF
THE PHILIPPINES
ARTICLE I.—Creation, Responsibilities and Corporate
Powers of the Central Bank
SECTION 1. Creation of the Central Bank.—There is
hereby created a body corporate to be known as the Central Bank of the
Philippines, which shall be governed by the provisions of this Act.
The capital of the Central Bank shall be ten million
(P10,000,000) pesos, which are hereby appropriated from the assets of the
Exchange Standard Fund, as provided in section 134 of this Act.
SEC. 2. Responsibilities and objectives.—It shall be
the responsibility of the Central Bank of the Philippines to administer the
monetary and banking system of the Republic.
It shall be the duty of the Central Bank to use the
powers granted to it under this Act to achieve the following objectives:
(a) To maintain monetary stability in the Philippines;
(b) To preserve the international value of the peso and
the convertibility of the peso into other freely convertible currencies; and
(c) To promote a rising level of production, employment
and real income in the Philippines.
SEC. 3. Place of business.—The Central Bank shall have
its principal place of business in the City of Manila, but may have such
branches, agencies and correspondents in other places as are necessary for
the proper conduct of its business.
SEC. 4. Corporate powers.—The Central Bank is hereby
authorized to adopt, alter, and use a corporate seal which shall be
judicially noticed; to make contracts; to lease or own real and personal
property, and to sell or otherwise dispose of the same; to sue and be sued;
and otherwise to do and perform any and all thing that may be necessary or
proper to carry out the purposes of this Act.
The Central Bank may acquire and hold such assets and
incur such liabilities as result directly from operations authorized by the
provisions of this Act, or as are essential to the proper conduct of such
operations.
ARTICLE II.—The Monetary Board
SEC. 5. Composition of the Monetary Board.—The powers
and functions of the Central Bank shall be exercised by a Monetary Board,
which shall be composed of seven members, as follows:
(a) The Secretary of Finance, who shall preside at the
meetings of the Monetary Board. Whenever the Secretary of Finance is unable
to attend a meeting of the Board, the Undersecretary of Finance shall act as
his alternate, but shall not preside.
(b) The Governor of the Central Bank, who shall preside
at the meetings of the Board in the absence of the Secretary of Finance. The
Governor shall be appointed for a term of six years by the President of the
Philippines with the consent of the Commission on Appointments. Whenever the
Governor is unable to attend a meeting of the Board, the ranking
deputy-governor shall act in his stead.
(c) The President of the Philippine National Bank,
whose alternate shall be the senior vice-president of said bank.
(d) The Chairman of the Board of Governors of the
Rehabilitation Finance Corporation, whose alternate shall be the ranking
governor of said corporation.
(e) Three other members, to be appointed for terms of
six years by the President with the consent of the Commission on
Appointments: Provided, however, That the first members appointed under the
provisions of this subsection shall have terms of office of two, four and
six years, respectively.
In making appointments to the Monetary Board, the
President of the Philippines shall give due regard to affording fair
representation of the financial, agricultural, industrial and commercial
interests, in the composition of the said Board.
SEC. 6. Vacancies.—Any vacancy in the Monetary Board
created by the death, resignation, or removal of an appointive member shall
be filled by the appointment of a new member to complete the unexpired
period of the term of the member concerned.
SEC. 7. Qualifications.—No person shall be appointed as
a member of the Monetary Board or as a deputy-governor of the Central Bank
unless he be of good moral character and of unquestionable integrity and
responsibility, and who is of recognized competence in the economics of
banking, finance, commerce, agriculture or industry: Provided, however, That
the Governor and deputy-governors of the Central Bank must be of recognized
competence in the field of banking: Provided, further, That the Governor and
the members of the Monetary Board shall be natural-born Filipino citizens.
SEC. 8. Disqualifications.—With the exception of the
ex-officio members and their respective alternates, none of the following
may be a member of the Monetary Board or a deputy-governor of the Central
Bank:
(a) Persons holding any public position or office,
either by election or by appointment, except academic positions; and
(b) Directors, officers or employees of other banking
institutions.
SEC. 9. Removal.—The President may remove any member of
the Monetary Board for any of the following reasons:
(a) If the member is disqualified under the provisions
of section 8 of this Act; or
(b) If the member is guilty of acts or operations which
are of a fraudulent or illegal character or which are manifestly opposed to
the aims and interests of the Central Bank; or
(c) If the member no longer possesses the
qualifications specified in section 7.
SEC. 10. Meetings.—The Monetary Board shall convene as
frequently as is necessary to discharge its responsibilities properly, but
shall meet at least once every two weeks. The Board may be convoked either
by the Secretary of Finance, in his capacity as presiding officer of the
Board, or by the Governor of the Central Bank.
The presence of four members shall constitute a quorum.
All decisions of the Monetary Board shall require the
concurrence of at least four members, except in special cases where the
provisions of other sections of this Act demand a greater majority.
SEC. 11. Attendance of the ranking deputy-governor and
the chief of the Department of Economic Research.—The ranking
deputy-governor of the Central Bank and the chief of the Department of
Economic Research shall attend the meetings of the Monetary Board with the
right to be heard but not to vote.
SEC. 12. Remuneration of members for attending meetings
of the Board.— The members of the Monetary Board their respective
substitutes, except the Governor and the ranking deputy-governor, shall
receive a per diem for every Board meeting attended. The amount of said per
diem shall be set by the President but may not exceed fifty (P50) Pesos, nor
the sum of five hundred pesos (P500) for any single month.
SEC. 13. Withdrawal of persons having a personal
interest.—Whenever any person attending a meeting of the Monetary Board has
a personal interest of any sort in the discussion or resolution of any given
matter, or any of his business associates or any of his relatives within the
fourth degree of consanguinity or second degree of affinity has such an
interest, said person may not participate in the discussion or resolution of
the matter and must retire from the meeting during the deliberations
thereon. The minutes of the meeting shall note the withdrawal of the member
concerned.
SEC. 14. Exercise of authority.—In order to exercise
the authority granted to it under this Act, the Monetary Board shall:
(a) Prepare and issue such rules and regulations as it
considers necessary for the effective discharge of the responsibilities and
exercise of the powers assigned to the Monetary Board and to the Central
Bank under this Act;
(b) Direct the management, operations and
administration of the Central Bank and prepare such rules and regulations as
it may deem necessary or convenient for this purpose;
(c) On the recommendation of the Governor, appoint, fix
the remunerations, and remove all officers and employees of the Central
Bank, with the exception of the Governor; and
(d) Authorize such expenditures by the Central Bank as
are in the interest of the effective administration and operation of the
Bank.
SEC. 15. Responsibility.— Any member of the Monetary
Board or officer or employee of the Central Bank who willfully violates this
Act or who is guilty of gross negligence in the Performance of his duties
shall be held liable for any loss or injury suffered by the Bank as a result
of such violation or negligence. Similar responsibility shall apply to the
disclosure of any information of a confidential nature about the discussions
or resolutions of the Monetary Board or about the operations of the Bank,
and to the use of such information for personal gain or to the detriment of
the Government, the Bank or third parties.
ARTICLE III.— The Governor and Deputy-Governors
of the Central Bank
SEC. 16. Powers and duties of the Governor.—The
Governor shall be the chief executive of the Central Bank. His powers and
duties shall be:
(a) To prepare the agenda for the meetings of the
Monetary Board and to submit for the consideration of the Board the policies
and measures which he believes to be necessary to carry out the purposes and
provisions of this Act;
(b) To execute and administer the policies and measures
approved by the Monetary Board;
(c) To direct and supervise the operations and internal
administration of the Central Bank. The Governor may delegate certain of his
administrative, responsibilities to other officers of the Bank, subject to
the rules and regulations of the Monetary Board; and
(d) To exercise such other powers as may be vested in
him by the Monetary Board.
SEC. 17. Representation of the Monetary Board and the
Central Bank.—The Governor of the Central Bank shall be the principal
representative of the Monetary Board and of the Bank, and in his capacity
and in accordance with the instructions of the Monetary Board he shall be
empowered:
(a) To represent the Monetary Board and the Central
Bank in all dealings with other offices, agencies and instrumentalities of
the Government and with all other persons or entities, public or private,
whether domestic, foreign or international;
(b) To authorize, with his signature, contracts
concluded by the Central Bank, notes and securities issued by the Bank, and
the annual reports, balance sheets, profit and loss statements,
correspondence and other documents of the Bank. The signature of the
Governor may be in facsimile wherever appropriate;
(c) To represent the Central Bank, either personally or
through counsel, in any legal proceedings or action; and
(d) To delegate his power to represent the Bank, as
provided in subsections (a), (b) and (c) of this section, to other officers
of the Bank upon his own responsibility.
SEC. 18. Authority of the Governor in emergencies.— In
the event of war or other emergencies which require immediate action and in
which there is insufficient time to call a meeting of the Monetary Board,
the Governor of the Central Bank, with the concurrence of the Secretary of
Finance or, in his absence, with the concurrence of any two other members of
the Monetary Board, may decide any matter or take any action within the
authority of the Board itself and may suspend any resolution or decision of
the Board.
In such cases, the Governor shall call a meeting of the
Monetary Board as soon as possible, in order to explain his action and the
reasons for departing from normal procedures. The Board may then confirm,
revoke or modify such action as the circumstances warrant.
SEC. 19. Outside interests of the Governor.—The
Governor of the Central Bank shall be required to limit his professional
activities to (those pertaining directly to his position with the Central
Bank; accordingly, the Governor of the Bank may not accept any other
employment, whether public or private, remunerated or ad honorem, with the
exception of academic positions and of public commissions related to the
formation, direction or implementation of monetary, banking or general
economic policies which concern the national interest of the Philippines.
SEC. 20. Remuneration of the Governor.—The salary of
Governor of the Central Bank shall be fixed by the Monetary Board with the
approval of the President of the Philippines, but in no case shall it exceed
thirty thousand pesos per annum.
SEC. 21. Deputy-Governor.—The Governor of the Central
Bank, with the approval of the Monetary Board, shall appoint one
deputy-governor who shall perform such duties as may be assigned to him by
the Governor and the Board.
In the absence of the Governor of the Central Bank, the
deputy-governor shall act as chief executive of the Central Bank and shall
exercise the powers and perform the duties of the Governor.
ARTICLE IV.—Departments of the Central Bank
A. DEPARTMENT OF ECONOMIC RESEARCH
SEC. 22. Responsibilities of the Department.—The
Central Bank shall establish and maintain a Department of Economic Research
which shall prepare data and conduct economic research for the guidance of
the Monetary Board in the formulation and implementation of its policies.
Toward this end, the Department of Economic Research
shall prepare forecasts of the balance of payments of the Philippines,
statistics on the monthly movement of the money supply and of prices, and
other statistical series and economic studies useful for the formulation and
analysis of monetary, banking and exchange policies.
The scope of the other functions and duties of the
department shall be defined and prescribed by the Monetary Board.
SEC. 23. Authority to obtain information.—The
Department of Economic Research shall have the authority to request from any
person or entity, including Government offices and instrumentalities, any
data which the Central Bank may require for the proper discharge of its
functions and responsibilities. The Central Bank shall have the power to
issue a subpoena for the production of the books and records of all such
persons and entities for the aforesaid purpose. Those who refuse without
justifiable cause to supply the Bank with the data requested, or required by
the subpoena, shall be subject to the penalties provided in section 32.
SEC. 24. Training of technical personnel.—The Central
Bank shall promote and sponsor the training of technical personnel in the
field of money and banking. Toward this end, the Central Bank is hereby
authorized to defray the costs of study, at home or abroad, of outstanding
employees of the Bank, of promising university graduates or of any other
qualified persons which shall be determined by proper competitive
examinations to be conducted by the Commissioner of Civil Service as in
other cases. The chief of the Department of Economic Research shall prepare
and supervise the training program of the Bank, subject to the rules and
regulations of the Monetary Board on the matter.
B. DEPARTMENT OF SUPERVISION AND EXAMINATION
SEC. 25. Creation of the Department.—In order to assure
the observance of this Act and of other pertinent laws, and of the rules and
regulations of the Monetary Board, the Central Bank shall have a Department
of Supervision and Examination which shall be charged with the supervision
and periodic examination of all banking institutions operating in the
Philippines, including all government credit institutions. The Department of
Supervision and Examination shall discharge its responsibilities in
accordance with the instructions of the Monetary Board. The Chief of the
department shall be known as the Superintendent of Banks.
The Superintendent of Banks and the examiners of the
Department of Supervision and Examination are hereby authorized to
administer oaths to any director, officer, or employee of any institution
under the supervision of the department and to compel the presentation of
all books, documents, papers or records necessary in has or their judgment
to ascertain the facts relative to the true condition of any institution.
SEC. 26. Qualifications.—The Superintendent of Banks
must be a person of recognized probity and competence in accounting,
auditing and banking practice.
SEC. 27. Prohibitions.—The Superintendent and all
employees of the Department of Supervision and Examination are hereby
prohibited from:
(a) Being an officer, director, employee, or
stockholder, directly or indirectly, of any institution subject to
supervision or examination by the department;
(b) Receiving any loan, advance, gift, or thing of
value from any such institution or from any officer, director; or employee
thereof;
(c) Revealing in any manner, except under orders of the
court, information relating to the condition or business of any such
institution. This prohibition shall not be held to apply to the giving of
information to the Monetary Board or the Governor of the Central Bank, or to
any person authorized by either of them, in writing, to receive such
information.
SEC. 28. Examination and fees.—It shall be the duty of
the Superintendent, personally or by deputy, at least once in every twelve
months, and at such other times as either he or the Monetary Board may deem
expedient, to make an examination of the books of every banking institution
within the purview of this Act and to make a report on the same to the
Monetary Board.
Every such institution shall afford to the
Superintendent and to his authorized deputies full opportunity to examine
its books, cash and available assets and general condition at any time when
requested so to do by the Superintendent: Provided, however, That none of
the reports and other papers relative to such examinations shall be open to
inspection by the public except in so far as such publicity is incidental to
the proceedings hereinafter authorized, or is necessary for the prosecution
of violations in connection with the business of such institutions.
The institutions which are subject to examination by
the Superintendent shall reimburse the Central Bank for the cost of
maintaining the Department of Supervision and Examination and, for this
purpose, shall pay to the Central Bank, within the first thirty days of each
year, an annual fee in an amount to be determined by the Monetary Board in
the manner provided in the next paragraph of this section.
The fee to be paid by each institution shall be an
amount equal to a prescribed percentage of its average total assets during
the preceding year, as shown, on its end-of-month balance sheets, after
deducting its cash on hand and amounts due from banks, including the Central
Bank and banks abroad: Provided, however, That said percentage may not
exceed one twentieth of one per cent (1/20 of 1%). If the total of the
maximum fees authorized under this paragraph should be insufficient to
defray the entire costs of the department, the difference shall be borne by
the Central Bank.
SEC. 29. Proceedings upon insolvency.—Whenever, upon
examination, by the Superintendent or his examiners or agents into the
condition of any banking institution, it shall be disclosed that the
condition of the same is one of insolvency, or that its continuance in
business would involve probable loss to its depositors or creditors, it
shall be the duty of the Superintendent forthwith, in writing, to inform the
Monetary Board of the facts, and the Board, upon finding the statements of
the Superintendent to be true, shall forthwith forbid the institution to do
business in the Philippines and shall take charge of its assets and proceeds
according to law.
The Monetary Board shall thereupon determine within
thirty days whether the institution may be reorganized or otherwise placed
in such a condition so that it may be permitted to resume business with
safety to its creditors and shall prescribe the conditions under which such
resumption of business shall take place. In such case the expenses and fees
in the administration of the institution shall be determined by the Board
and shall be paid to the Central Bank out of the assets of such banking
institution.
At any time within ten days after the Monetary Board
taken charge of the assets of any banking institution, institution may apply
to the Court of First Instance for an order requiring the Monetary Board to
show cause why it should not be enjoined from continuing such charge of its
assets, and the court may direct the Board to refrain from further
proceedings and to surrender charge of its assets.
If the Monetary Board shall determine that the banking
institution cannot resume business with safety to its creditors, it shall,
by the Solicitor General, file a petition in the Court of First Instance
reciting the proceedings which have been taken and praying the assistance
and supervision of the court in the liquidation of the affairs of the same.
The Superintendent shall thereafter, upon order of the Monetary Board and
under the supervision of the court and with all convenient speed, convert
the assets of the banking institution to money.
SEC. 30. Distribution of assets.—In case of liquidation
of a banking institution, after payment of the costs of the proceedings,
including reasonable expenses and fees of the Central Bank to be allowed by
the court, the Central Bank shall pay the debts of such institution, under
order of the court, in accordance with their legal priority.
SEC. 31. Disposition of fees and commissions.—All costs
and fees earned by the Central Bank in winding up the affairs and
administering the assets of any banking institution within the purview of
this Act shall be used to pay the salaries of the clerks and other employees
whose employment is rendered necessary in the discharge of the trust,
together with other additional expenses caused thereby. The balance of fees
and costs earned, after the payment of all expenses, shall be for the
account of the Central Bank.
SEC. 32. Refusal to make reports or permit
examination.—Any owner, agent, manager, or other officer in charge of any
banking institution within the purview of this Act who, being thereunto
required in writing by the Monetary Board or by the Superintendent, shall
willfully refuse to file the required report or permit any lawful
examination into the affairs of such institution shall be punished by a fine
of not more than ten thousand pesos or by imprisonment for not more than one
year, or by both, in the discretion of the court.
SEC. 33. False statement.—The willful making of a false
statement to the Monetary Board or to the Superintendent of Banks or to his
examiners shall be punished by a fine not to exceed fifteen thousand pesos,
or by imprisonment for a term not to exceed two years, or by both, in the
discretion of the count.
SEC. 34. Proceedings upon violation of laws and
regulations.— Whenever any person or entity willfully violates this Act or
any order, instruction, rule or regulation legally issued by the Monetary
Board, the person or persons responsible for such violation shall be
punished by a fine of not more than twenty thousand pesos and by
imprisonment of not more than five years.
Whenever a banking institution persists in violating
its charter or by-laws or any law, or orders, instructions, rules or
regulations legally issued by the Monetary Board, or whenever a banking
institution persists in carrying on its business in an unlawful or unsafe
manner, the Board shall, by the Solicitor General, and without prejudice to
the penalties provided in the preceding paragraph of this section, file a
petition in the Court of First Instance praying the assistance of the court
to compel the banking institution to discontinue the violations or practices
objected to in the petition of the Board. The Monetary Board may, with the
approval of the court, take such action as the court may deem necessary
compel the banking institution complained against to discontinue the
violations or practices set forth in the Boards petition, and, if necessary,
the Board may, under order of the court, direct the Superintendent of Banks
to liquidate the business of the institution.
C. OTHER DEPARTMENTS OF THE CENTRAL BANK
SEC. 35. Organization of other departments.—The
Monetary Board shall organize a foreign exchange department, a credit
department, and such other departments as it deems convenient for the proper
and efficient conduct of the business of the Central Bank. The powers and
duties of the departments shall be determined by the Monetary Board, within
the authority granted to the Board and the Central Bank under this act.
ARTICLE V.—Reports and Publications
SEC. 36. Reports and publications.— Within the first
eight days of each month the Central Bank shall publish a general balance
sheet showing the volume and composition of its assets and liabilities as of
the last working day of the preceding month.
SEC. 37. Annual report.—Before the end of March of each
year the Central Bank shall submit to the President of the Philippines, to
the Senate through its President, to the House of Representatives through
its Speaker, and shall publish an annual report on the condition of the Bank
and a review of the policies and measures adopted, by the Monetary Board
during the past year and an analysis of the economic and financial
circumstances which gave rise to said policies and measures.
The annual report shall also include a statement of the
financial condition of the Central Bank and a statistical appendix which
shall present, as a minimum, the following data:
(a) The monthly movement of the money supply,
distinguishing between currency and deposit money;
(b) The monthly movement of purchases and sales of
exchange and of the international reserve of the Bank;
(c) The balance of payments of the Philippines;
(d) Monthly indices of wages, of the cost of living and
of import and export prices;
(e) The monthly movement, in summary form, of exports
and imports, by volume and value;
(f) The monthly movement of the accounts of the Central
Bank and of other banks, by groupings and classifications to be determined
by the chief of the Department of Economic Research in agreement with the
Superintendent of Banks;
(g) The principal data on Government receipts and
expenditures and on the status of the public debt, both domestic and
foreign; and
(h) The texts of the major legal and administrative
measures adopted by the Government and the Monetary Board during the year
which relate to the functions or operations of the Central Bank or of
banking institutions operating in the Philippines.
SEC. 38. Signatures on statements.—The balance sheets
and other financial statements of the Central Bank shall be signed by the
officers responsible for their preparation, by the Governor, and by the
auditor of the Bank.
ARTICLE VI.— Profits, Losses, and Special Accounts
SEC. 39. Fiscal year.—The fiscal year of the Bank shall
begin on January first and end on December thirty-first of each year.
SEC. 40. Computation of profits and losses.—Within the
first thirty days following the end of each fiscal year, the Central Bank
shall determine its net profits or losses. In the calculation of net
profits, the Bank shall make adequate allowance or establish adequate
reserves for bad and doubtful accounts.
SEC. 41. Distribution of net profits.—Within the first
sixty days following the end of each fiscal year, the Monetary Board shall
determine and carry out the distribution of the net profits, in accordance
with the following rules:
(a) Twenty-five per cent (25%) of the net profits shall
be carried to surplus until such time as the total capital accounts of the
Bank reach a sum equivalent to at least ten per cent (10%) of the total
assets of the Bank less its assets in gold and foreign currencies;
(b) Any net profits remaining after fulfilling the
conditions established in subsection (a) of this section shall be used to
increase the resources of the Securities Stabilization Fund, until the
volume and liquidity of the Fund’s assets are considered ample for any open
market operations in which the Fund is deemed likely to engage;
(c) Any net profits remaining after fulfilling the
conditions of subsections (a) and (b) of this section shall be used to
reduce the Account to Secure the. Coinage or the Monetary Adjustment Account
until said accounts shall have been liquidated. The Monetary Board shall
determine the distribution between these two accounts;
(d) If any net profits remain after fulfilling the
conditions of subsections (a), (b) and (c) of this section, the balance or
any part thereof may be transferred, to surplus, or may be used to liquidate
Government obligations to the Central Bank, or may be paid into the General
Fund of the Government. The Monetary Board shall determine this
distribution.
SEC. 42. Distribution of net losses.— Should the
Central Bank incur net losses during any fiscal year, such losses shall be
debited to surplus, and if surplus be inadequate the balance shall be
debited to the capital of the Bank.
SEC. 43. Extraordinary expenses of currency issue and
monetary stabilization.—The Monetary Board may, whenever it deems it
advisable, exclude from the computation of the annual profits and losses of
any given fiscal year all or part of the following extraordinary expenses
incurred during that year:
(a) Extraordinary costs of printing notes or of minting
coins;
(b) Extraordinary expenditures arising from the 0sue
and service of the evidences of indebtedness to which reference is made in
section 98; and
(c) Interest paid on bank reserves which exceed fifty
per cent (50%) of bank deposits, in conformity with the provisions of
section 101, last paragraph, of this Act.
The amounts which are excluded from the computation of
profits and losses in accordance with the provisions of the first paragraph
of this section shall be entered in a suspense account which shall be called
the “Monetary Adjustment Account.”
The Monetary Board shall in every case amortize such
expenses over a period which shall not exceed five years and at a rate which
shall be based on the adequacy of the Bank’s surplus and of the resources of
the Securities Stabilization Fund.
SEC. 44. Revaluation profits and losses.—The
revaluation profits or losses made or assumed by the Central Bank m
accordance with the provisions of sections 77 and 83 of this Act shall not
be included in the computation of the annual profits and losses of the
Central Bank.
Any profits or losses arising in this manner shall be
offset by any amounts which, as a consequence of such revaluations are owed
by the Philippines to the International Monetary Fund and the International
Bank for Reconstruction and Development or are owed by these institutions to
the Philippines. Any remaining profit or loss shall be carried in a special
frozen, account which shall be named “Revaluation of International Reserve”
and the net balance of which shall appear either among the liabilities or
among the assets of the Central Bank, depending on whether the revaluations
have produced net profits or net losses.
The Revaluation of International Reserve account shall
be neither credited nor debited for any purposes other than those
specifically authorized in the present section or in section 45 of this Act.
SEC. 45. Profits from recoinage or from reductions in
the Bank’s currency liabilities.—Any profits arising from a remitting of
coins or from a reduction in the currency liabilities of the Central Bank as
a consequence of the loss, destruction or demonetization of notes and coins
shall not be included in the computation of the annual profits of the
Central Bank.
Any such profits shall be used to reduce the Monetary
Adjustment Account, the Account to Secure the Coinage, or the asset account
Revaluation of International Reserve. The distribution of such profits among
these accounts shall be determined by the Monetary Board.
If none of said accounts exists, the profits to which
this section refers shall be used to increase the resources of the
Securities Stabilization Fund.
ARTICLE VII.— The Auditor
SEC. 46. Appointment and personnel.—The Auditor-General
shall appoint a representative who shall be the auditor of the Central Bank.
The Auditor-General shall appoint the necessary personnel to assist said
representative in the performance of his duties. The salaries of the auditor
and his staff shall be determined by the Auditor-General with the advice of
the Monetary Board. Said salaries and aid other expenses of maintaining the
auditor office shall be paid by the Central Bank. The auditor of the Central
Bank said personnel under him may be removed only by the Auditor-General.
The representative of the Auditor-General must be a
certified public accountant with at least ten years’ experience as certified
public accountant or a person who has had training and experience in
commercial or central banking. No relative of any member of the Monetary
Board or the Auditor-General within the sixth degree of consanguinity or
affinity shall be appointed such representative.
CHAPTER II.—THE CENTRAL BANK AND THE
MEANS OF PAYMENT
ARTICLE I.— The Unit of Monetary Value
SEC. 47. The peso.—The unit of monetary value in the
Philippines is the “peso,” which is represented by the sign “P.”
The peso is divided into one hundred equal parts called
“centavos,” which are represented by the “c.”
ARTICLE II.— The International Value of the Peso
SEC. 48. Par value.—The gold value of the peso is seven
and thirteen-twenty firsts (7-13/21) grains of gold, nine-tenths (0.900)
fine, which is equivalent to the United States dollar parity of the peso as
provided in section 6 of Commonwealth Act No. 699.
SEC. 49. Changes in par value.— The par value of the
peso shall not be altered except when such action is made necessary by the
following circumstances:
(a) When the existing par value would make impossible
the achievement and maintenance of a high level of production, employment
and real income without:
(1) The depletion of the international reserve of the
Central Bank; or
(2) The chronic use of restrictions on the
convertibility of the peso into foreign currencies or on the transferability
abroad of funds from the Philippines; or
(3) Undue Government intervention in, or restriction
of, the international flow of goods and services; or
(b) When uniform proportionate changes in par values
are made by the countries which are members of the International Monetary
Fund; or
(c) When the operation of any executive or
international agreement to which the Republic of the Philippines is a party
requires an alteration in the gold value of the peso.
Any modification in the gold or dollar value of the
peso must be in conformity with the provisions of all executive and
international agreements subscribed to and ratified by the Republic of the
Philippines, and such modification shall be made only by the President of
the Republic upon the proposal of the Monetary Board and with the approval
of Congress. The proposal of the Monetary Board shall require the
concurrence of at least five of the members of Board.
Notwithstanding the provision of the preceding
paragraph with respect to the approval of Congress, if there should be an
.emergency which, in the opinion of the President, is so grave and so urgent
as to require immediate action, the President may modify the par value of
the peso without the prior approval of Congress: Provided, however, That he
shall report to the Congress on his action at the earliest opportunity.
SEC. 50. Parties of foreign currencies with respect to
the peso.— The legal parties of foreign currencies with respect to the
Philippine peso shall be determined as follows:
(b) Currencies of countries which are members of the
International Monetary Fund shall have their parities with respect to the
peso established on the basis of their par values as announced by said Fund.
If the par value of the currency of a member country has not been announced,
the parity of such currency with respect to the peso shall be calculated on
the basis of the exchange rates for that currency in foreign markets. If
there is divergence among the rates quoted in foreign markets, the Monetary
Board shall determine which rates shall be employed for the calculation of
parity.
(b) Currencies of countries which are not members of
the International Monetary Fund shall have ‘their parities with the peso
established on the basis of their gold or United States, dollar equivalents,
provided such currencies are freely and effectively convertible into gold or
dollars. Whenever the currency of any such country is not so convertible its
parity with the peso shall be calculated on the basis of the exchange rates
for that currency in foreign markets. If there as divergence among the rates
quoted in foreign markets, the Monetary Board shall determine which rates
shall be employed for the calculation of parity.
The Central Bank shall determine, in conformity with
the provisions of this section, and shall publish regularly, the legal
parities of the foreign currencies of importance in the international
transactions of the Philippines. The Central Bank may also specify the
parity of any foreign currency not included in the published list of
parities.
The parities published or specified by the Central Bank
shall be recognized as the legal parities for all purposes.
ARTICLE III.—Issue of Means of Payment
A. CURRENCY
SEC. 51. Definition of currency.—The word “currency” is
hereby defined, for the purposes of this Act, as meaning all Philippine
notes and coins issued or circulating in accordance with the provisions of
this Act.
SEC. 52. Issue power.—The Central Bank shall have the
sole right and authority to issue currency within the territory of the
Philippines. No other person or entity, public or private, may put into
circulation notes, coins, or any other object or document which, in the
opinion of the Monetary Board, might circulate as currency.
The Monetary Board may issue such regulations as it may
deem advisable in order to prevent the circulation of foreign currency or of
currency substitutes.
SEC. 53. Liability for notes and coins.—Notes and coins
issued by the Central Bank shall be liabilities of the Bank, and may be
issued only against, and in amounts not exceeding, the assets of the Bank.
Said notes and coins shall be a first and paramount lien on all assets of
the Central Bank.
The Central Banks holdings of its own notes and coins
shall not be considered as part of its currency issue and, accordingly,
shall not form part of the assets or liabilities of the Bank.
SEC. 54. Legal tender power.—All notes and coins issued
by the Central Bank shall be fully guaranteed by the Government of the
Republic of the Philippines and shall be legal tender [in the Philippines
for all debts, both public and private.
SEC. 55. Characteristics of the currency.—The Monetary
Board, with the approval of the President of the Philippines, shall
prescribe the denominations, dimensions, designs, inscriptions and other
characteristics of notes issued by the Central Bank: Provided, however, That
said notes shall state that they are liabilities of the Central Bank and are
fully guaranteed by the Government of the Republic of the Philippines. Said
notes shall bear the signatures, in facsimile, of the President of the
Philippines and of the Governor of the Central Bank.
Similarly, the Monetary Board, with the approval of the
President of the Philippines, shall; prescribe the weight, fineness,
designs, denominations and other characteristics of the coins issued by the
Central Bank. In the minting of coins, the Monetary Board shall give full
consideration to the availability of suitable metals and to their relative
prices and cost of minting.
SEC. 56. Printing of notes and minting of coins.—The
Monetary Board shall prescribe the amounts of notes and coins to be printed
and minted, respectively, and the conditions to which the printing of notes
and the minting of coins shall foe subject. The Monetary Board shall have
the authority to contract institutions, mints or firms for such operations.
All expenses incurred in the printing of notes and the
minting of coins shall be for the account of the Central Bank.
SEC. 57. Inter convertibility of currency.—The Central
Bank shall exchange, on demand and without charge, Philippine currency of
any denomination for Philippine notes and coins of any other denomination
requested. If, for any reason, the Central Bank should temporarily be unable
to provide notes or coins of the denominations requested it shall meet its
obligation by delivering notes and coins of the denominations which most
nearly approximate those requested.
SEC. 58. Replacement of currency unfit for
circulation.— The Central Bank shall withdraw from circulation and shall
demonetize all notes and coins which for any reason whatsoever are unfit for
circulation and shall replace them by adequate notes and coins: Provided,
however, That the Central Bank shall not replace notes and coins the
identification of which is impossible, coins which show signs of filing,
clipping or perforation, and notes which have lost more than two-fifths of
their surface or all of the signatures inscribed thereon. Notes and coins in
such mutilated condition shall be withdrawn from circulation and demonetized
without compensation to the bearer, unless it is proved to the satisfaction
of the Central Bank that the currency became unfit for circulation as a
result of accidental causes or forces beyond control, in which ease
replacement shall be made.
SEC. 59. Retirement of old notes and coins.—The Central
Bank may call in for replacement notes of any series or denomination which
are more than five years old and coins which are more than ten years old.
Notes and coins called in for replacement in accordance
with this provision shall remain legal tender for a period of one year from
the date of call. After this period, they shall cease to be legal tender but
during the following three years, or for such longer period as the Monetary
Board may determine, they may be exchanged at par and without charge in the
Central Bank and by agents duly authorized by the Central Bank for this
purpose. After the expiration of this latter period, the notes and coins
which have not been exchanged shall cease to be a liability of the Central
Bank and shall be demonetized. The Central Bank shall also demonetize all
notes and coins which have been called in and replaced.
SEC. 60. Profits from recoinage or from reductions in
the Bank’s currency liabilities.—Any profits resulting from recoinage or
from a reduction in the liabilities of the Central Bank through loss,
destruction or demonetization of currency shall be used for the purposes
mentioned in section 45 of this Act.
B. DEPOSIT MONEY
SEC. 61. Definition.—For the purpose of this Act, the
term “deposit money” means all those liabilities of the Central Bank and of
other banks which are denominated in Philippine currency and are subject to
payment in legal tender upon demand by the presentation of checks.
SEC. 62. Issue of deposit money.—Only banks duly
authorized so to do may accept funds or create liabilities payable in pesos
upon demand by the presentation of checks, and such operations shall be
subject to the control of the Monetary Board in accordance with the powers
granted it with respect thereto under this Act.
SEC. 63. Legal character.—Checks representing deposit
money do not have legal tender power and their acceptance in the payment of
debts, both public and private, is at the option of the creditor.
CHAPTER III.—GUIDING PRINCIPLES OF MONETARY
ADMINISTRATION BY THE CENTRAL BANK
ARTICLE I.—Domestic Monetary Stabilization
SEC. 64. Guiding principles—The Monetary Board shall
endeavor to control any expansion or contraction in the money supply, or any
rise or fall in prices, which in the opinion of the Board is prejudicial to
the attainment or maintenance of a high level of production, employment, and
real income. In adopting policies and measures in accordance with this
principle the Monetary Board shall have due regard for their effects on the
availability and cost of money to particular sectors of the economy as well
as to the economy as a whole, and their effects on the relationship of
domestic prices and costs to world prices and costs.
SEC. 65. Definition of the money supply.— For the
purposes of this section, and of this Act, the money supply is defined as
consisting of all holdings of domestic currency and deposit money with the
exception of such holdings by the Government and by banks having checking
deposit liabilities in domestic currency. The statistics prepared by the
Central Bank on the volume of the money supply shall be based on this
definition to the extent that available data permit.
SEC. 66. Action when abnormal movements occur in the
money supply or price level.— Whenever abnormal movements in the money
supply or in prices endanger the stability of the Philippine economy or
important sectors thereof, the Monetary Board shall:
(a) Take such remedial measures as are appropriate and
within the powers granted to the Monetary Board and the Central Bank under
the provisions of this Act; and
(b) Submit to the President of the Philippines and the
Congress, and make public, a detailed report which shall include, as a
minimum, a description and analysis of:
(1) The causes of the rise or fall of the money supply
or of prices;
(2) The extent to which the changes in the money supply
or in prices have been reflected in changes in the level of domestic output,
employment, wages and economic activity in general, and the nature and
significance of any such changes; and
(3) The measures which the Monetary Board has taken and
the other monetary fiscal or administrative measures which it recommends be
adopted.
Whenever the money supply increases or decreases by
more than fifteen per cent (15%), or the cost of living index increases by
more than ten per cent (10%), in relation to the level existing at the end
of the corresponding month, of the preceding year, the Monetary Board shall
submit the report to which reference is made in subsection (b) of this
section, and shall state therein whether, in the opinion of the Board, said
changes in the money supply or cost of living represent a threat into the
stability of the Philippine economy or of important sectors thereof.
The Monetary Board shall continue to submit periodic
reports to the President of the Philippines until it considers that the
monetary or price disturbances have disappeared or have been adequately
controlled.
ARTICLE II.—International Monetary Stabilization
SEC. 67. Guiding principle.—The Central Bank of the
Philippines shall exercise its powers under this Act to maintain the par
value of the peso and the convertibility of the peso into other freely
convertible currencies.
SEC. 68. International reserve.—In order to maintain
the International stability and convertibility of the Philippine peso, the
Central Bank shall maintain an international reserve adequate to meet any
foreseeable net demands on the Bank for foreign currencies.
In judging the adequacy of the international reserve,
the Monetary Board shall be guided by the prospective receipts and payments
of foreign exchange by the Philippines. The Board shall give special
attention to the volume and maturity of the Central Bank’s own liabilities
in foreign currencies, to the volume and maturity of the foreign exchange
assets and liabilities of other banks operating in the Philippines and,
insofar as they are known or can be estimated] the volume and maturity of
the foreign exchange assets and liabilities of all other persons and
entities in the Philippines.
SEC. 69. Composition of the international reserve.—The
international reserve of the Central Bank of the Philippines may include the
following assets:
(a) Gold; and
(b) Assets in foreign currencies in the form of:
documents and instruments of types customarily employed for the
international transfer of funds; demand and time deposits in central banks,
treasuries and commercial banks abroad; foreign government securities with
maturities not, exceeding five years; and foreign notes and coins.
The Monetary Board shall endeavor to hold the foreign
exchange resources of the Central Bank in freely convertible currencies;
moreover, the Board shall give particular consideration to the prospects of
continued strength and convertibility of the currencies in which the reserve
is maintained, as well as to the anticipated demands for such currencies.
The Monetary Board shall issue regulations determining the other
qualifications which foreign exchange assets must meet in order to be
included in the international reserve of the Central Bank.
The Central Bank shall be free to convert any of the
assets in its international reserve into any other asset of a type included
under subsections (a) and (b) of this section.
SEC. 70. Action when the international stability of the
peso is threatened.—Whenever the international reserve of the Central Bank
falls to an amount which the Monetary Board considers inadequate to meet the
prospective net demands on the Central Bank for foreign currencies, or
whenever the international reserve appears to be in imminent danger of
falling to such a level, or whenever the international reserve is falling as
a result of payments or remittances abroad which, in the opinion of the
Monetary Board, are contrary to the national welfare, the Monetary Board
shall:
(a) Take such remedial measures as are appropriate and
within the powers granted to the Monetary Board and the Central Bank under
the provisions of this Act; and
(b) Submit to the President of the Philippines a
detailed report which shall include, as a minimum, a description and
analysis of:
(1) The nature and causes of the existing or imminent
decline;
(2) The remedial measures already taken or to be taken
by the Monetary Board;
(3) The further monetary, fiscal or administrative
measures proposed; and
(4) The character and extent of the cooperation
required from other Government agencies for the Successful execution of the
policies of the Monetary Board.
If the resultant actions fail to check the
deterioration of the reserve position of the Central Bank, or if the
deterioration cannot be checked except by chronic restrictions on exchange
and trade transactions or by sacrifice of the domestic objectives of a high
level of production, employment and real income, the Monetary Board shall
propose to the President such additional action as it deems necessary
restore equilibrium in the international balance of payments of the
Philippines.
The Monetary Board shall submit periodic reports to the
President until the threat to the international monetary stability of the
Philippines has disappeared.
CHAPTER IV.—INSTRUMENTS OF CENTRAL BANK ACTION
ARTICLE I.—General Criteria
SEC. 71. Means of action.—In order to achieve the
international and domestic objectives, of the national monetary policy, the
Monetary Board shall rely on its moral influence, the powers granted to it
under this Act for the regulation of money, credit and exchange, and the
support and cooperation of the Government and all its agencies.
ARTICLE II.—Operations in Gold and Foreign Exchange
SEC. 72. Purchases and sales of gold.—The Central Bank
may buy and sell gold in any form, subject to such regulations as the
Monetary Board may issue.
The Monetary Board may at any time require that any
gold held by any person or entity under the jurisdiction of the Philippines
be delivered to the Central Bank or to any banks or other agents contracted
or engaged by the Central Bank for the purpose. The Monetary Board may also
impose conditions under which gold in any shape or form may be acquired and
held, transported, melted or treated, imported, exported, earmarked or held
in custody for foreign or domestic account.
The purchases and sales of gold authorized by this
section shall be made in national currency and at rates which do not differ
from the par value of the peso by more than the margins established by the
International Monetary Fund.
SEC. 73. Purchases and sales of foreign exchange.—The
Central Bank may buy and soil foreign notes and coins, and documents and
instruments of types customarily employed for the international transfer of
funds. The Bank may engage in future exchange operations.
The Central Bank may engage in foreign exchange
transactions with the following entities only:
(a) Banking institutions operating in the Philippines;
(b) The Government, its political subdivisions and
instrumentalities;
(c) Foreign or international financial institutions;
and
(d) Foreign governments and their instrumentalities.
In order to maintain the convertibility of the peso,
the Central Bank shall, at the request of any banking institution operating
in the Philippines, buy any quantity of foreign exchange offered, and sell
any quantity of foreign exchange demanded, by such institution, provided
that the foreign currencies so offered or demanded are freely convertible
into gold or United States dollars. This requirement shall not apply to
demands for foreign notes and coins.
The Central Bank shall effect its exchange transactions
between foreign currencies and the Philippine peso at the rates determined
in accordance with the provisions of section 76.
SEC. 74. Emergency restrictions on exchange
operations.—Notwithstanding the provisions of the third paragraph of the
preceding section, in order to protect the international reserve of the
Central Bank during an exchange crisis and to give the Monetary Board and
the Government time in which to take constructive measures to combat such a
crisis, the Monetary Board, with the concurrence of at least five of its
members, and with the approval of the President of the Philippines, may
temporarily suspend or restrict sales of exchange by the Central Bank and
may subject all transactions in gold and foreign exchange to license by the
Central Bank. The adoption of the emergency measures authorized in this
section shall be subject to any executive and international agreements to
which the Republic of the Philippines is a party.
SEC. 75. Acquisition of inconvertible currencies.—The
Central Bank shall avoid the acquisition and holding of currencies which are
not freely convertible, and may acquire such currencies in an amount
exceeding the minimum balance necessary to cover current demands for said
currencies only when, and to the extent that, such acquisition is considered
by the Monetary Board to be in the national interest. The Monetary Board
shall determine the procedures which shall apply to the acquisition and
disposition by the Central Bank of foreign exchange which is not freely
utilizable in the international market.
SEC. 76. Exchange rates.—The Monetary Board shall
determine the rates at which the Central Bank shall buy and sell spot
exchange, but said rates shall not differ by more than one-half of one per
cent from the legal parities established in section 50, unless in any given
case a greater divergence from the legal parity exists in foreign markets.
The Central Bank shall not collect any additional commissions or charges of
any sort, other than actual telegraphic or cable costs incurred by it.
The Monetary Board shall similarly determine the rates
for other types of foreign exchange transactions by the Central Bank,
including purchases and sales of foreign notes and, coins, but the margins
between the legal parities and the rates thus established may not exceed the
corresponding margins for spot exchange transactions by more than the
additional costs or expenses involved in each type of transaction.
SEC. 77. Revaluation profits and losses on Central
Bank’s international assets.—The profits or losses arising from any
revaluation of the Central Bank’s net assets or liabilities in gold or
foreign currencies as a result of changes in the gold value of the peso, or
of changes in the parities or exchange rates of foreign currencies with
respect to the Philippine peso, shall be distributed in the manner provided
in section 44 of this Act.
SEC. 78. Operations with foreign entities.—The Central
Bank of the Philippines may grant loans to and receive loans from foreign
banks and other foreign or international entities, both public and private,
and may engage in such other operations with these entities as are in the
national interest and are appropriate to its character as a central bank.
The Central Bank may also act as agent or correspondent for such entities.
The Central Bank may pledge any gold or other assets
which it possesses as security against loans which it receives from foreign
or international entities.
ARTICLE III.—Regulation of Foreign Exchange Operations
of the Banks
SEC. 79. Rates applicable to purchases and sales of
exchange by the Banks.—The Monetary Board shall determine the minimum and
maximum rates at which, the banks may buy spot exchange, and the maximum and
minimum rates at which they may sell spot exchange, but the rates thus
established for each currency shall not differ from the respective legal
parity by more than one per cent, unless in any given case a greater
divergence from parity exists in foreign markets. The banks shall not
collect any additional commissions or charges other than actual telegraphic
or cable costs incurred by them.
The rates to be used by the banks for other types of
exchange transactions shall be based on their spot exchange rates and shall
not differ from such rates by margins greater than those considered
reasonable by the Monetary Board: Provided, however, that the Board may at
any time specifically fix such margins. The Monetary Board shall issue such
rules and regulations as may be necessary to implement the provisions of
this paragraph.
The rates established in accordance with the provisions
of this section shall not apply to exchange transactions with the Central
Bank. Such transactions shall be made at the rates established in accordance
with the provisions of section 76 of this Act.
SEC. 80. Foreign exchange holdings of the banks.—In
order that the Central Bank may at all times have foreign exchange resources
sufficient to enable it to maintain the international stability and
convertibility of the peso, or in order to promote the domestic investment
of bank resources, the Monetary Board may require the banks to sell the
Central Bank all or part of their surplus holdings of foreign exchange. Such
transfers may be required for all foreign currencies or for only certain of
such currencies, according to the decision of the Monetary Board. The
Transfers shall be made at the rates established under the Provisions of
section 76 of this Act.
For the purposes of this Act, surplus holdings of any
foreign currency shall be defined as the amount by which a bank’s assets in
the currency exceed the sum of the working balance required to accommodate
normal short run fluctuations between the bank’s sales and purchases of said
currency and the total liabilities of the bank in the currency: Provided,
however, That in calculating surplus holdings in any given currency, a bank
may, at the discretion of the Monetary Board, subtract from its net assets
in that currency an amount equal to any net liabilities of the bank in other
currencies into which said currency is freely convertible.
The Monetary Board may stipulate that the working
balance to which reference is made in the preceding paragraph shall not
exceed a specified proportion of the average daily sales of the respective
currency by the bank to entities other than the Central Bank during the
preceding month. Any proportion thus established by the Monetary Board, and
any requirement to transfer foreign exchange to the Central Bank, shall be
applied to all banks alike and without discrimination.
SEC. 81. Requirement of balanced currency position.—
The Monetary Board may require the banks to maintain a balanced position
between their assets and liabilities in Philippine pesos or in any other
currency or currencies in which they operate. The banks shall be granted a
reasonable period of time in which to adjust their currency positions to any
such requirement.
The powers granted under this section shall be
exercised only when special circumstances make such action necessary, in the
opinion of the Monetary Board, and shall be applied to all banks alike and
without discrimination.
SEC. 82. Regulation of non-spot exchange transactions.—
In order to restrain the banks from taking speculative positions with
respect into future fluctuations in foreign exchange rates, the Monetary
Board may issue such regulations governing bank purchases and sales of
non-spot exchange as it may consider necessary for said purpose.
SEC. 83. Revaluation profits and losses on bank’s
holdings of gold and foreign exchange.—Any revaluation profits realized or
losses suffered by the banks on their net assets or liabilities in gold or
freely convertible foreign currencies as a result of changes in the par
value of the peso, in the legal parities between the Philippine peso and
such foreign currencies, or in the Central Bank’s exchange rates for such
currencies, shall be for the account of the Central Bank in their entirety.
The Monetary Board may at any time declare that
revaluation profits or losses on banks’ net holdings of any foreign currency
other than those included under the provisions of the first paragraph of
this section shall also be for the account of the Central Bank until such
time as the Board gives notice to the contrary. Said notice shall be
communicated, to the banks at least eight days before the date on which the
revaluation risks cease to be for the account of the Central Bank, however,
and shall apply only to acquisitions of the specified foreign currency
subsequent to said date. The Board shall issue appropriate regulations to
restrain the banks from increasing their holdings of the specified currency
during the period from the date of the notice to the date on which it
becomes effective.
The Monetary Board shall issue such rules and
regulations as may be necessary to administer the provisions of this
section.
SEC. 84. Other exchange losses.— The banks shall bear
the risks of non-compliance with the terms of the foreign exchange documents
and instruments which they buy or sell, and shall also bear any other
typically commercial or banking risks, including exchange risks not assumed
by the Central Bank under the provisions of the preceding section.
SEC. 85. Information on exchange operations.—The banks
shall report to the Central Bank of the Philippines the volume and
composition of their purchases and sales of gold and foreign exchange each
day, and must furnish such additional information as the Central Bank may
request with reference to the movements in their accounts in foreign
currencies.
The Monetary Board may also require other persons and
entities to report to it currently all transactions or operations in gold,
in any shape or form, and in foreign exchange. The Monetary Board shall
prescribe the forms on which such declarations must be made. The accuracy of
the declaration may be verified by the Central Bank by whatever inspection
it may deem necessary.
ARTICLE IV.—Loans to Banking Institutions
A. THE CREDIT POLICY OF THE CENTRAL BANK
SEC. 86. Guiding principles.—The rediscounts,
discounts, loans and advances which the Central Bank is authorized to extend
to banking institutions under the provisions of the present article of this
Act shall be used to regulate the volume, cost availability and character of
bank credit and to provide the banking system with liquid funds in times of
need.
In periods of inflation, or as long as inflationary
dangers exist, the Central Bank shall refrain from extending credit to banks
and at such times shall grant credit only in exceptional cases where special
circumstances justify a deviation from the principle stated herein.
Conversely, whenever the national monetary policy
requires an expansion of the money supply, the Central Bank shall make full
use of the credit operations authorized under the present article of this
Act.
B. NORMAL CREDIT OPERATIONS
SEC. 87. Authorized types of operations.—Subject to the
principles stated in the preceding section of this Act, the Central Bank may
normally and regularly carry on the following credit operations with banking
institutions operating in the Philippines:
(a) Commercial credits.—The Central Bank may
rediscount, discount, buy and sell bills, acceptances, promissory notes and
other credit instruments with maturities of not more than 180 days from the
date of their rediscount, discount or acquisition by the Central Bank and
resulting from transactions related to:
(1) The importation, exportation, purchase or sale of
readily salable goods and products, or their transportation within the
Philippines; or
(2) The storing of nonperishable goods and products
which are duly insured and deposited, under conditions assuring their
preservation, in authorized bonded warehouses or in other places approved by
the Monetary Board.
(b) Production credits. —The Central Bank may
rediscount, discount, buy and sell bills, acceptances, promissory notes and
other credit instruments having maturities of not more than 270 days from
the date of their rediscount, discount or acquisition by the Central Bank
and resulting from transactions related to the production or processing of
agricultural, animal, mineral or industrial products. Documents or
instruments acquired in accordance with this subsection shall be secured by
a pledge of the respective crops or products.
(c) Advances.—The Central Bank may grant advances
against the following kinds of collateral for fixed periods which, with the
exception of advances against the collateral named in clause (4) of the
present subsection, shall not exceed 10 days:
(1) Gold coins or bullion;
(2) Securities representing obligations of the Central
Bank or of other domestic credit institutions of recognized solvency;
(3) The credit instruments to which reference is made
in subsection, (a) of this section;
(4) The credit instruments to which reference is made
in subsection (b) of this section, for periods which shall not exceed 270
days;
(5) Utilized portions of advances in current account
covered by regular overdraft agreements related to operations included under
subsections (a) and (b) of this section, and certified as to amount and
liquidity by the institution soliciting the advance;
(6) Negotiable treasury bills, certificates of
indebtedness, notes and other negotiable obligations of the Government
maturing within three years from the date of .the advance; and
(7) Negotiable bonds issued by the Government of the
Philippines, by Philippine provincial, city or municipal governments, or by
any Philippine Government instrumentality, and having maturities of not more
than ten years from the date of the advance.
The rediscounts, discounts, loans and advances made in
accordance with the provisions of this section may not be renewed or
extended unless extraordinary circumstances fully justify such renewal or
extension.
Advances made against the collateral named in clauses
(6) and (7) of subsection (c) of this section may not exceed; 80 per cent of
the current market value of the collateral.
C. EXTRAORDINARY CREDIT OPERATIONS
SEC. 88. Loans to mortgage, institutions.— Under
special circumstances in which the Monetary Board considers it advisable to
promote or facilitate the lending operations, or certain classes thereof, of
savings banks, building and loan associations, or of the Rehabilitation
Finance Corporation, the Central Bank may grant loans or advances with
maturities of not more than, one year to said institutions against pledge or
assignment of payments, installments or amortizations of their borrowers
coming due within the twelve months from the date of the granting of such
loans or advances, and in an amount not exceeding forty per cent of the
payments, installments or amortizations pledged or assigned: Provided,
however, That the Central Bank shall not make such loans or advances
whenever such action would aggravate or contribute to inflationary
tendencies existing in the economy.
In granting loans and advances under this section, the
Central Bank shall first ascertain that the payments, installments and
amortizations to be pledged or assigned to it are in no case currently in
arrears and that said payments, installments and amortizations are related
to credit operations which in every case are adequately secured by
mortgages. Said mortgages shall be assigned to the Central Bank.
SEC. 89. Extension of maturities.—Whenever, in the
opinion of the Monetary Board, a deflationary situation exists which
requires special expansionary credit measures, the Central Bank may extend
the maximum maturities of new credit operations granted under the provisions
of subsections (a), (b) and (c) of section 87 to periods not exceeding one
year.
D. EMERGENCY CREDIT OPERATIONS
SEC. 90. Emergency loans and advances.—In periods of
emergency or of imminent financial panic which directly threaten monetary
and banking stability, the Central Bank may grant banking institutions
extraordinary advances secured by any assets which are defined as acceptable
security by a concurrent vote of at least five members of the Monetary
Board. While such advances are outstanding, the debtor institution may not
expand the total volume of its loans or investments without the prior
authorization of the Monetary Board.
E. CREDIT TERMS
SEC. 91. Interest and rediscount rates.—The Monetary
Board shall fix the interest and rediscount rates to be charged by the
Central Bank on its credit operations in accordance with the character and
term of the operation, but after due consideration has been given to the
credit needs, of the market, the composition of the Central Bank’s
portfolio, .and the general requirements of the national monetary policy.
SEC. 92. Endorsement.—The documents rediscounted,
discounted, bought or accepted as collateral by the Central Bank in the
course of the credit operations authorized in this article must bear the
endorsement of the institution from which they are received.
SEC. 93. Repayment of credits.—Documents rediscounted,
discounted or accepted as collateral by the Central Bank must be withdrawn
by the borrowing institution on the dates of their maturities, or upon
liquidation of the obligations which they represent or to which they relate
whenever said obligations have been liquidated prior to their dates of
maturity.
Banks shall have the right at any time to withdraw any
documents which they have presented to the Central Bank as collateral, upon
payment in full of the corresponding debt to the Bank, including interest
charges.
SEC. 94. Other requirements.—The Monetary Board may
prescribe, within the general powers granted to it under this Act,
additional conditions which borrowing institutions must satisfy in order to
have access to the credit of the Central Bank. These conditions may refer to
the rates of interest charged by the banks, to the purposes for which their
loans in general are destined, and to any other clearly definable aspect of
the credit policy of the bank.
ARTICLE V.—Credit Operations with the Government
SEC. 95. Provisional advances to the Government.—The
Central Bank may make direct provisional advances to the Government or to
any of its political subdivisions to finance expenditures authorized in the
annual appropriations of the borrowing entity: Provided, That said advances
must be repaid before the end of the first quarter following the end of the
fiscal year of the Government or political subdivision and shall not, in
their aggregate, exceed fifteen per cent of the average annual income of the
borrower for if the last three preceding years.
ARTICLE VI.—Open Market Operations for the Account
of the Central Bank
SEC. 96. Principles of open market operations.—The open
market purchases and sales of securities by the Central Bank shall be made
exclusively for the purpose of achieving the objectives of the national
monetary policy and shall be limited to the operations authorized in
sections 97 and 98 of this Act.
Accordingly in periods of inflation or as long as
inflationary dangers exist, the Central Bank shall refrain from open market
purchases and at such times shall endeavor to reduce its security holdings
and/or to sell the evidences of indebtedness which it is permitted to issue
under the provisions of section 98 of this Act.
Conversely, whenever the national monetary policy
requires an expansion of the money supply, the Central Bank may repurchase
its own evidences of indebtedness prior to their date of maturity, as
authorized in section 98, and may acquire the securities to which reference
is made on section 97. In purchasing said securities, the Central Bank shall
give preference to short-term obligations, in order that the Bank may be in
a better position to reduce the money supply should conditions in the future
so require.
Whenever securities meeting the conditions established
in section 97 of this Act represent obligations in foreign currencies, the
decisions of the Monetary Board to purchase and sell such securities shall
be governed by the adequacy of the international reserve of the Central Bank
and by the effect which such operations would have on the balance of
payments and the volume of the money supply.
SEC. 97. Purchases and sales of Government securities.—
In order to achieve the objectives of the national monetary policy, the
Central Bank may, in accordance with the principles stated in section 96 of
this Act and with such rules and regulations as may be prescribed by the
Monetary Board, buy and sell in the open, market for its own account:
(a) Evidences of indebtedness issued directly by the
Government of the Philippines or by its political subdivisions, and
(b) Evidences of indebtedness issued by Government
instrumentalities and fully guaranteed by the Government.
The evidences of indebtedness acquired under the
provisions of this section must be freely negotiable and regularly serviced.
SEC. 98. Issue and negotiation of Central Bank
obligations.—In order to provide the Central Bank with effective instruments
for open market operations, the Bank may, subject to such rules and
regulations as the Monetary Board may prescribe and in accordance with the
principles stated in section 96 of this Act, issue, place, buy and sell
freely negotiable evidences of indebtedness of the Bank. Said evidences of
indebtedness may be issued directly against the international reserve of the
Bank or against the securities which it has acquired under the provisions of
section 97 of this Act, or may be issued without relation to specific types
of assets of the Bank.
The Monetary Board shall determine the interest rates,
maturities and other characteristics of said obligations of the Bank, and
may, if it deems it advisable, denominate the obligations in gold or foreign
currencies.
Subject to the principles stated in section 96 of this
Act, the evidences of indebtedness of the Central Bank to which this section
refers may be acquired by the Bank before their maturity, either through
purchases in the open market or through redemptions at par and by lot if the
Bank has reserved the right to make such redemptions. The evidences of
indebtedness acquired or redeemed by the Central Bank shall not be included
among its assets, and shall be immediately retired and cancelled.
ARTICLE VII.—Composition of Central Bank’s Portfolio
SEC. 99. Review of the Central Bank’s portfolio.—At
least once every month the Monetary Board shall review the portfolio of the
Central Bank in relation to the Bank’s future credit policy.
In reviewing the Central Bank’s portfolio, the Monetary
Board shall especially consider whether a sufficiently large part of the
portfolio consists of assets with early maturities, in order that a
contraction in Central Bank credit may be effected promptly whenever the
national monetary policy so requires.
ARTICLE VIII.—Bank Reserves
SEC. 100. Reserve requirements.—In order to control the
volume of money created by the credit operations of the banking system,
banks operating in the Philippines shall be required to maintain reserves
against their deposit liabilities. The required reserves of each bank shall
be proportional to the volume of its deposit liabilities and shall
ordinarily take the form of a deposit in the Central Bank of the
Philippines; nevertheless, the Monetary Board may, whenever circumstances
warrant, permit the maintenance of part of the required reserves in the form
of assets other than peso deposits with the Central Bank. Reserve
requirements shall be applied to all banks uniformly and without
discrimination.
SEC. 101. Required reserves against peso deposits.—The
Monetary Board is authorized to prescribe and modify the minimum reserve
ratios applicable to each class of peso deposits: Provided, however, That
such ratios shall not be less than live per cent (5%) or more than
twenty-live per cent (25%) for time and savings deposits, and shall not be
less than ten per cent (10%) or more than fifty per cent (50%) for demand
deposits.
Notwithstanding the provisions of the preceding
paragraph of this section, the Monetary Board may, in periods of inflation,
prescribe higher reserve ratios, but not exceeding 100 per cent, for any
future increase in the deposits of each bank above the amounts outstanding
on the date on which the bank is notified of the requirement.
Whenever the reserve requirements established by the
Monetary Board place any bank under obligation to maintain minimum reserves
in excess of twenty-five per cent (25%) of its total time or savings
deposits, or in excess of fifty per cent (50%) of its total demand deposits,
the Central Bank may pay interest on said excess at a rate which shall not
be higher than the Bank’s lowest rediscount rate.
SEC. 102. Required reserves against foreign currency
deposits.—The Monetary Board is similarly authorized to prescribe and modify
the minimum reserve ratios applicable to deposits denominated in foreign
currencies: Provided, however, that such ratios may not be set below ten per
cent (10%) or above one hundred per cent (100%), with respect to deposit
liabilities in each foreign currency.
The Monetary Board shall determine the form and the
currency, either national or foreign, in which such reserves shall be
maintained: Provided, however, that any such requirements shall not preclude
the banks from keeping a balanced position between their assets and
liabilities in each of the foreign currencies in which they operate.
SEC. 103. Reserves against unused balances of overdraft
lines.— In order to facilitate Central Bank control over the volume of bank
credit, the Monetary Board may establish minimum reserve requirements for
unused balances of overdraft lines.
The power is of the Monetary Board to prescribe and
modify reserve requirements against unused balances of over-draft lines
shall be the same as its powers with respect to reserve requirements against
demand deposits.
SEC. 104. Increase in reserve requirements.—Whenever it
becomes necessary, in the opinion of the Monetary Board, to increase reserve
requirements against existing liabilities, the increase shall be made in a
gradual manner and shall not exceed four percentage points in any thirty-day
period. The banks shall be notified reasonably in advance of the date on
which such increase is to become effective.
SEC. 105. Computation on reserves.—The reserve position
of each bank shall be calculated daily on the basis of the amount, at the
close of business for the day, of the bank’s reserves and the amount of its
liability accounts against which reserves are required to be maintained.
For the purpose of computing the reserve position of
each bank, its principal office in the Philippines and all its branches and
agencies located therein shall be considered as a single unit.
SEC. 106. Reserve deficiencies.— Whenever the reserve
position of any bank, computed in the manner specified in the preceding
section of this Act, is below the required minimum, the bank shall pay the
Central Bank one tenth of one per cent (1/10 of 1%) per day on the amount of
the deficiency: Provided, however, That banks shall ordinarily be permitted
to offset any reserve deficiency occurring on one or more days of the week
with any excess reserves which they may hold on other days of the same week
and shall be required to pay the penalty only on the average daily
deficiency during the week. In cases of abuse, the Monetary Board may deny
any bank the privilege of offsetting reserve deficiencies in the aforesaid
manner.
If a bank chronically has a reserve deficiency, the
Monetary Board may limit or prohibit the making of new loans or investments
by the bank and may require that part or all of the met profits of the bank
be assigned to surplus.
SEC. 107. Interbank settlements.—The Central Bank shall
provide facilities for interbank clearing.
The deposit reserves maintained by the banks in the
Central Bank, in .accordance with the provisions of section 100, shall serve
as a basis for the clearing of checks and the settlement of interbank
balances, subject to such rules and regulations as the Monetary Board may
issue with respect to such operations.
ARTICLE IX.—Selective Regulation of Bank Operations
SEC. 108. Guiding principle.—The Monetary Board shall
use the powers granted to it under the present article and elsewhere in this
Act to ensure that the supply availability and cost of money are in accord
with the needs of the Philippine economy and that bank credit is not granted
for speculative purposes prejudicial to the national interests.
SEC. 109. Interest rates, commissions and charges.— The
Monetary Board may fix the maximum rates of interest which banks may pay on
deposits and on any other obligations.
The Monetary Board may, within the limits prescribed in
the Usury Law (Act No. 2655, as amended), fix the maximum rates of interest
which banks may charge for different types of loans and for any other credit
operations, or may fix the maximum differences which may exist between the
interest or rediscount rates of the Central Bank and the rates which the
banks may charge their customers if the respective credit documents are not
to lose their eligibility for rediscount or advances in the Central Bank.
Any modifications in the maximum interest rates
permitted for the borrowing or lending operations of the banks shall apply
only to future operations and not to those made prior to the date on which
the modification becomes effective.
In order to avoid possible evasion, of maximum interest
rates set by the Monetary Board, the Board may also fix the maximum rates
that banks may pay to or collect from their customers in the form of
commissions, discounts, charges, fees or payments of any sort.
SEC. 110. Margin requirements against letters of
credit.— In order to restrict the granting of bank credit for purposes which
are contrary to the general welfare of the Philippines, the Monetary Board
may at any time prescribe minimum cash margins for the opening of letters of
credit, and may relate the size of the required margin to the nature of the
transaction to be financed.
The Board may particularly use its powers under this
section to require high margins for the opening of letters of I credit to
finance the importation of luxuries or other non-essential goods, or to
finance any goods the importation of which at the time is considered by the
Monetary Board to be unduly prompted by speculative motives prejudicial to
the interests of the Philippine economy.
SEC. 111. Required security against bank loans.—In
order to promote the liquidity and solvency of the banking system, or to
influence the availability of bank credit for specific purposes, the
Monetary Board may issue such regulations as it may deem necessary from time
to time with respect to the maximum permissible maturities of the loans and
investments which the banks may make, and the kind and amount of security to
be required against the various types of credit operations of the banks.
SEC. 112. Portfolio ceilings.— Whenever the Monetary
Board considers it advisable to prevent or check an expansion of bank
credit, the Board may place an upper limit on the amount of loans and
investments which the banks hold, or may place a limit on the rate of
increase of such assets within specified periods of time. The Monetary Board
may apply such limits to the loans and investments of each bank or to
specific categories thereof.
In no case shall the Monetary Board establish limits
which are below the value of the loans or investments of the banks on the
date on which they are notified of such restrictions. The restrictions shall
be applied to all banks uniformly and without discrimination.
SEC. 113. Minimum capital ratios.—In order to regulate
the volume and distribution of bank credit, and to ensure the maintenance of
bank capital and surplus at levels adequate to protect the depositors
against risk of loss, the Monetary Board may prescribe minimum ratios which
the capital and surplus of the banks must bear to the volume of their
assets, or to specific categories thereof, and may alter said ratios
whenever it deems it convenient so to do.
ARTICLE X.—Government Credit Institutions as
Instruments of the National Monetary Policy
SEC. 114. Co-ordination of credit
policies.—Government-owned corporations which perform banking or credit
functions are hereby declared to be instruments of the national monetary
policy and, accordingly, shall co-ordinate their general credit policies
with those of the Monetary Board.
Toward this end, the Monetary Board may, whenever it
deems it expedient, make suggestions or recommendations to such corporations
for the more effective co-ordination of their policies with those of the
Central Bank.
CHAPTER V.—FUNCTIONS AS FISCAL AGENT, BANKER
AND FINANCIAL ADVISOR OF THE GOVERNMENT
ARTICLE I.—Functions as Fiscal Agent and Banker of the
Government
SEC. 115. Designation of Central Bank as fiscal agent
and banker of the Government.—The Central Bank of the Philippines shall act
as the fiscal agent and banker of the Government its political subdivisions
and instrumentalities.
SEC. 116. Representation with the International
Monetary Fund.—The Central Bank of the Philippines shall represent the
Government of the Philippines in all dealings, negotiations and trans
actions with the International Monetary Fund and shall carry such accounts
as may result from Philippine membership in, or operations with, said Fund.
SEC. 117. Representation with other financial
institutions.—The Central Bank may be authorized by the Government to
represent it in dealings, negotiations or transactions with the
International Bank for Reconstructions and Development and with other
foreign or international financial institutions or agencies.
SEC. 118. Official deposits.—The Central Bank shall be
the official depository of the Government and its political subdivisions and
instrumentalities: Provided, however, that the Monetary Board may designate
Government-owned banks and other banks incorporated in the Philippines to
accept deposits from said entities, subject to such rules and regulations as
the Board may prescribe.
SEC. 119. Fiscal operations.—The Central Bank shall
open a general cash account for the Treasurer of the Philippines, in which
the liquid funds of the Government shall be deposited.
Transfers of funds from this account to other accounts
shall be made only upon order of the Treasurer of the Philippines.
SEC. 120. Other banks as agents of the Central Bank.—In
the performance of its functions as fiscal agent, the Central Bank may
engage the services of the Philippine National Bank and of other domestic
banks for operations in localities at home or abroad in which the Central
Bank does not have offices or agencies adequately equipped to perform said
operations: Provided, however, That for fiscal operations in foreign
countries, the Central Bank may engage the services of foreign banking and
financial institutions.
SEC. 121. Remuneration for services.—The Central Bank
shall not charge for services which lit renders to the Government and to its
political, subdivisions and instrumentalities any rates, commissions or
fees.
The Bank shall not pay interest on deposits of the
Government or of its political subdivision’s and instrumentalities.
ARTICLE II.— The Marketing and Stabilization of
Securities for the Account of the Government
A. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES
SEC. 122. Issue of Government obligations.—The issue of
securities representing obligations of the Government, its political
subdivisions or instrumentalities, shall be made through, the Central Bank,
which shall act as agent of, and for that account of, the Government or its
respective subdivision or instrumentality, as the case may be: Provided,
however, That the Bank shall not subscribe to the issue of said securities
and shall not guarantee their placement.
SEC. 123. Methods of placing Government securities.—
The Central Bank may place the securities to which the preceding section
refers through direct sale to financial institutions and the public, through
outright sale to syndicates, brokers or dealers for purposes of resale to
the public for their own account, or through brokers or banks contracted to
place the securities with the public for the account of the Central Bank.
The Central Bank shall not be a member of any stock
exchange or syndicate, but may intervene therein, for the sole purpose of
regulating their operations in the placing of Government securities.
The Government, or its respective subdivisions or
instrumentalities, shall reimburse the Central Bank for the expenses
incurred in the placing of the aforesaid securities.
SEC. 124. Servicing and redemption of the public debt.—
The servicing and redemption of the public debt shall also be effected
through the Central Bank.
B. CENTRAL BANK SUPPORT OF THE GOVERNMENT
SECURITIES MARKET
SEC. 125. The Securities Stabilization Fund.— There
shall be established a “Securities Stabilization Fund” which shall be
administered by the Central Bank for the account of the Government.
The operations of the Securities Stabilization Fund
shall consist of purchases and sales, in the open market, of bonds and other
evidences of indebtedness issued or fully guaranteed by the Government of
the Philippines. The purpose of these operations shall be to increase the
liquidity and stabilize the value of said Securities in order thereby to
promote private investment in Government obligations.
The Monetary Board shall use the resources of the Fund
to prevent, or moderate, sharp fluctuations in the quotations of said
Government obligations, but shall not endeavor to alter movement of the
market resulting from basic changes in the pattern or level of interest
rates.
The Monetary Board shall issue such regulations as may
be necessary to implement the provisions of this section.
SEC. 126. Resources of the Securities Stabilization
Fund.— The resources of the Securities Stabilization Fund shall come from
the following sources:
(a) Two million (P2,000,000) pesos, which are hereby
appropriated from the assets of the Exchange Standard Fund, as provided in
section 134 of this Act, and such other appropriations as the Government may
make from time to time;
(b) That part of the annual net profits of if the
Central Bank allocated to the Fund in accordance with the provisions of
section 41;
(c) Profits arising from recoinage or from reductions
in the currency issue, under the conditions specified in section 45.
SEC. 127. Profits and losses of the Fund.—The
Securities Stabilization Fund shall retain any net profits which it may make
on its operations, regardless of whether said profits arise from capital
gains or from interest earnings. The Fund shall correspondingly bear any net
losses which it may incur.
ARTICLE III.—Functions as Financial Advisor
of the Government
SEC. 128. Financial advice on official credit
operations.— Before undertaking any credit operation abroad, the Government,
through the Secretary of Finance, shall request the opinion, in writing, of
the Monetary Board on the monetary implications, of the contemplated action.
Such opinions must similarly be requested by all political subdivisions and
instrumentalities of the Government before any credit operation abroad is
undertaken by them.
The opinion of the Monetary Board shall be based on the
gold and foreign exchange resources and obligations of the nation and on the
effects of the proposed operation on the balance of payments and on the
volume of the money supply.
Whenever the Government, or any of its political
subdivisions or instrumentalities, contemplates borrowing within the
Philippines, the prior opinion of the Monetary Board shall likewise be
requested in order that the Board may render an opinion on the probable
effects of the proposed operation on the money supply, the price level, and
the balance of payments.
SEC. 129. Representation on the National Economic
Council.— In order, to assure effective coordination between the economic,
financial and fiscal policies of the Government and the monetary, credit and
exchange policies of the Central Bank, the Governor of the Central Bank
shall be an ex officio member of the National Economic Council.
CHAPTER VI.—PRIVILEGES AND PROHIBITIONS
ARTICLE I.—Privileges
SEC. 130. Tax exemptions.—The Central Bank of the
Philippines shall be exempt, from all national, provincial, Municipal and
city taxes and assessments now in force or hereafter established.
The exemptions authorized in the preceding paragraph of
this section shall apply to all property of the Central Bank, to the
resources, receipts, expenditures, profits and income of the Bank, as well
as to all contracts, deeds, documents and transactions related to the
conduct of the business of the Bank: Provided, however, That said exemptions
shall apply only to .such taxes and assessments for which .the Central Bank
itself would otherwise be liable, and shall not apply to taxes or
assessments payable by persons or other entities doing business with, the
Central Bank.
SEC. 131. Exemption from customs duties.—The
importation and exportation by the Central Bank of notes and coins, and of
gold and other metals to be used for purposes authorized under this Act, and
the importation of all equipment needed for furnishing, equipping and
operating the offices of the Bank, shall be fully exempt from all customs
duties and consular fees and from all other taxes, assessments and charges
related to such importation or exportation.
SEC. 132. Applicability of the Civil Service
Law.—Appointment in the Central Bank, except as to those which are
policy-determining, primarily confidential or highly technical in nature,
shall be made only according to the Civil, Service Law and Regulations.
Officers and employees in the Central Bank, including
all members of the Monetary Board, shall not engage directly or indirectly
in partisan activities or take part in any election except to vote.
No officer or employee of the Central Bank subject to
the Civil Service Law and Regulations shall be removed or suspended except
for cause as provided by law.
ARTICLE II.—Prohibitions
SEC. 133. Prohibitions.—The Central Bank shall not
acquire shares of any kind or accept them as collateral, and shall not
participate in the ownership or management of any enterprise, either
directly or indirectly.
CHAPTER VII.—TRANSITORY PROVISIONS
ARTICLE I.— The Exchange Standard Fund
SEC. 134. Liquidation of the Exchange Standard Fund.—
Prior to the date on which the Central Bank commences business, the Exchange
Standard Fund shall be liquidated. The net assets of the Fund remaining
after outstanding liabilities have been, met shall be used for the following
purposes and in the following priority:
(a) Ten million (P10,000,000) pesos shall be used to
subscribe to the capital stock of the Central Bank;
(b) Two million (2,000,000) pesos shall be transferred
to the Securities Stabilization Fund; and
(c) The remainder shall be transferred to the Bank in
accordance with the provisions of section 135.
ARTICLE II.—Retirement of Treasury Certificate and
Coins
SEC. 135. Assumption by the Central Bank of the
liability for treasury certificates.— On the date of which the Central Bank
commences business, it shall assume the liability of the Treasury
Certificate Fund for all outstanding treasury certificates. The amount of
the liability shall be determined by the Secretary of Finance and certified
by the Auditor-General. In consideration, for assuming this Inability the
Treasurer of the Philippines shall transfer to the Bank all of the available
assets of the Treasury Certificate Fund and that portion of the assets of
the Exchange Standard Fund which may remain after deducting the amounts
required to provide the capital of the Bank and the contribution to the
Securities Stabilization Fund, as provided in the preceding section.
If the total assets thus transferred exceed the
liability assumed, the difference shall be used to establish a reserve on
the books of the Central Bank against the: contingency that the actual
amount of treasury certificates which the Central Bank may be called upon to
exchange for its own notes may prove to be larger than the liability
originally assumed. If the total assets transferred should be less than
liability assumed, the Secretary of Finance shall deliver to the Bank a
non-interest bearing, non-negotiable note without fixed maturity in the
amount of the difference.
The Central Bank shall, as soon as practicable,
exchange outstanding treasury certificates for its own notes in accordance
with the procedure described in section 59 of this Act. During the period of
such exchange any treasury certificates exchanged, by the Bank in excess of
the liability originally assumed for such certificates shall be charged,
first, to the reserve mentioned in the preceding paragraph, if there be such
reserve, and, second, to the deposit of the Government. At the expiration of
the exchange period any remaining balance of the liability account for
outstanding treasury certificates shall be applied, first, to reduce the
face value of the note delivered by the Secretary of Finance in accordance
with the preceding paragraph, if such a note has been issued, and, second,
to reduce the Account to Secure the Coinage, the creation of which is
provided for in the following section. Any remaining balance of the
above-mentioned reserve shall be applied solely to reduce the Account to
Secure the Coinage.
SEC. 136. Assumption by the Central Bank of the
liability for treasury coins.—On the date on which the Central Bank
commences business, the total Philippine treasury coin issue, including
coins dumped in Manila Bay but not yet salvaged, shall become a liability of
the Bank. As a contra item against the liability thereby assumed there shall
be set up on the books of the Central Bank an asset account in an amount
equal to the face value of the total Philippine treasury coin issue. This
account shall be called the “Account to Secure the Coinage.”
The Central Bank shall, as soon as practicable,
exchange treasury coins in circulation for Central Bank coins in accordance
with the procedure described in section 59 of this Act. When the Monetary
Board has completed the exchange of treasury coins for its own coins and has
thereby determined the precise amount of the liability which it originally
assumed for the treasury coin issue, the outstanding amount of the Account
to Secure the Coinage shall be reduced by the difference between the
original amount of the Account and the amount of the liability as finally
determined.
ARTICLE III.—Extraordinary Advances to the
Government
SEC. 137. Extraordinary advances to the Government.
—Notwithstanding any provisions in the present Act to the contrary, the
Central Bank may, until June 30, 1951, make direct advances to the
Government when, in the opinion of the Monetary Board, the international
reserve is adequate to meet all foreseeable demands upon it and when such
advances are consistent with the achievement of the Boards objective of
domestic monetary stability. The total advances made under the authority of
this section shall not exceed two hundred million (P200,000,000) pesos.
The Bank shall make the above advances only against an
equivalent amount of negotiable government securities having maturities
which, insofar as possible, are appropriate to the uses to which the
advances will be put, but which in no case shall exceed 15 years. In order
.to permit their resale by the Central Bank, the securities shall be in
denominations and bear interest rates which will make them attractive to the
banks and to the public.
Advances shall be made only for certain purposes
specifically authorized by law, and shall be made only for productive and
income-producing projects, or for the repayment or servicing of external
obligations of the Government.
ARTICLE IV.—Miscellaneous Provisions
SEC. 138. Transfer of powers and functions of the
Bureau of the Treasury to the Central Bank.— All powers, duties and
functions vested in the Bureau of the Treasury and the Treasurer of the
Philippines which by the provisions of this Act shall be exercised by the
Bank are hereby transferred to the Central Bank.
SEC. 139. Transfer of authority, powers, and functions
of the Bank Commissioner and the Bureau of Banking to the Central Bank.—All
authority now vested in the Bank Commissioner and the Bureau of Banking with
respect to the establishment, operation or liquidation of banking and credit
institutions, and branches or agencies thereof, and all other powers, duties
and functions vested in the Bureau, Ranking and the Bank Commissioner which
by the protons of this Act shall be exercised by the Bank, are hereby
transferred to the Central Bank.
SEC. 140. Repeal of inconsistent laws.— All laws, parts
laws, and any special charters, or parts thereof, of banking and financial
institutions inconsistent herewith are hereby repealed.
SEC. 141. Exemption from restrictions on bank
borrowing.— The restrictions on bank borrowing which are contained in
sections 6 and 7 of Act 3610 shall not apply bank borrowings from the
Central Bank.
SEC. 142. Effectivity of this Act.—This Act shall take
effect upon approval. The Central Bank of the Philippines shall commence
business upon organization of the Monetary Board and certification by the
Secretary of Finance that the authorized capital of the Bank has been fully
paid-in and that the Bank is ready for operation.
Approved, June 15, 1948.