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Understanding Money and Monetary Policy

Chapter 8 discusses the history and functions of money, defining it as a medium of exchange, unit of account, and store of value. It highlights the importance of stable money and healthy banks for a functioning economy, and outlines the role of the Bangko Sentral ng Pilipinas (BSP) in regulating banks and implementing monetary policies. The chapter also categorizes different types of banks and describes the concept of money creation through banking institutions.

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Mayumi Akatsuki
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21 views15 pages

Understanding Money and Monetary Policy

Chapter 8 discusses the history and functions of money, defining it as a medium of exchange, unit of account, and store of value. It highlights the importance of stable money and healthy banks for a functioning economy, and outlines the role of the Bangko Sentral ng Pilipinas (BSP) in regulating banks and implementing monetary policies. The chapter also categorizes different types of banks and describes the concept of money creation through banking institutions.

Uploaded by

Mayumi Akatsuki
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

CHAPTER 8:

MONEY AND
MONETARY POLICY
LEARNING OBJECTIVES:
 After the end of this discussion, listeners should be able to:

1. Discuss a brief history of money and enumerate the


different use of money;
2. Define the concepts related to banking;
3. Discuss the different types and functions of banks; and
4. Identify the function of the Bangko Sentral ng Pilipinas
(BSP) relative to monetary policies.
WHAT IS MONEY?
 In GENERAL…
Money is considered as wealth
 In BUSINESS, ACCOUNTING, OR FINANCE…
Money is called cash, an amount that businessmen
and accountants enter in their record books and balance.
 For ECONOMISTS…
Money is an item that is used by buyers to purchase
goods and services.
TWO OLDEST FORM OF
MONEY
An item that has an intrinsic value and used as a form
Commodity money
of money

Its value only comes from the law that gives it value
Flat money
in the area or country where it used.
THREE FUNCTIONS OF
MONEY
 MEDIUM OF EXCHANGE

- money facilitates the transfer of a product from one person to another.

 UNIT OF ACCOUNT

- Money becomes the measure that people use to buy the goods that they want.

 STORE OF VALUE
- Money can be saved and used in the future without losing its value quickly.
IMPORTANCE OF MONEY
 There are several realities that relate money and monetary policy
to the economy:

1. Stable value of money is essential to trade.


2. Healthy banks are important for savers, investors, borrowers,
and the public.
3. Markets play a vital role in the function of our monetary system.
4. A well-designed and well-executed monetary policy is essential
for an economy to keep its resources fully employed.
BANKS
 Institutions that serve as intermediary between the
savers and the borrowers.

 Depositors or savers place their money in banks for


the purpose of :
a) earning interest
b) Security from lost
c) Storage
SEVEN MAJOR TYPE OF
BANKS
 Universal banks
 Commercial banks
 Thrift banks
 Rural banks
 Cooperative banks
 Islamic banks
 Digital banks
BANGKO SENTRAL NG
PILIPINAS (BSP)
 Supervisor of all banks that regularly monitors and examines
the operations of the banks and their compliance with
banking rules and regulations.
 It is also considered as bank of all banks
 It is also the issuer of money
 Monetary authority
 The custodian of the country’s official reserves
 Also known as the lender of last resort
MONETARY POLICIES IN THE
PHILIPPINES
Open Market operations
(OMO)
Reserve Requirements
Interest Rates
CONCEPT OF MONEY
CREATION

This concept believes that when money is placed in
banks and financial institutions, it multiplies.
THAT IS ALL THANK YOU
RECAP TIME!!!

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