American era and World War II In 1900, the
First Philippine Commission passed Act No. 52. This placed all banks under the Bureau of the Treasury and authorized the Insular Treasurer to supervise and examine banks and all banking activity. In 1929, the
Department of Finance, through the Bureau of Banking, took over bank supervision. still bearing the 2010 logo, January 2021 By 1933, a group of
Filipinos had conceptualized a central bank for the
Philippine Islands. It came up with the rudiments of a bill for the establishment of a central bank after a careful study of the economic provisions of the
Hare–Hawes–Cutting Act, which would grant Philippine independence after 12 years, but reserving military and naval bases for the
United States and imposing tariffs and quotas on Philippine exports. However, the Hare–Hawes–Cutting Act would be rejected by the
Senate of the Philippines at the urging of
Commonwealth President Manuel L. Quezon. This Senate then advocated a new bill that won
United States President Franklin D. Roosevelt's support, this would be the
Tydings–McDuffie Act, which would grant Philippine independence on July 4, 1946. Under the
Commonwealth, discussions continued regarding the idea of a Philippine central bank that would promote
price stability and economic growth. The country's monetary system then was administered by the Department of Finance and the National Treasury, and the
Philippine peso was on the exchange standard using the
United States dollar, which was backed by 100 percent
gold reserve, as the standard currency. As required by the
Tydings–McDuffie Act, the
National Assembly of the Philippines in 1939 passed a law establishing a central bank. As it was a monetary law, it required the approval of the
President of the United States;
Franklin D. Roosevelt did not give his. A second law was passed in 1944 under the
Japanese-controlled Second Republic during the
Second World War, but the 1945 arrival of American liberation forces, aided by Philippine Commonwealth troops and recognised guerrillas, aborted its implementation.
Third Republic and martial law Shortly after
President Manuel Roxas assumed office in 1946, he instructed then-
Finance Secretary Miguel Cuaderno, Sr. to draw up a charter for a central bank. The establishment of a monetary authority became imperative a year later as a result of the findings of the Joint Philippine-American Finance Commission chaired by Cuaderno. The commission, which studied Philippine financial, monetary, and fiscal problems in 1947, recommended a shift from the dollar exchange standard to a
managed currency system. A central bank was needed to implement this proposed shift. Roxas then created the Central Bank Council to prepare the charter of a proposed monetary authority. It was submitted to
Congress in February 1948. The Central Bank Act authored by then Congressman
José J. Roy was signed into law in June of the same year by the newly proclaimed President
Elpidio Quirino, who succeeded the late President Roxas, affixing his signature on
Republic Act (RA) No. 265 or the Central Bank Act of 1948. Over the years, changes were introduced to make the charter more responsive to the needs of the economy. On November 29, 1972, President
Ferdinand Marcos' Presidential Decree No. 72 amended Republic Act No. 265, emphasizing the maintenance of domestic and international monetary stability as the primary objective of the Central Bank. The Bank's authority was also expanded to include regulation of the nation's entire financial system just supervision of the banking system. In 1981, RA 265, as amended, was further improved to strengthen the financial system, among the changes was the increase in the capitalization of the Central Bank from
₱10 million to ₱10 billion. The Central Bank facilitated loans to
Marcos cronies at Marcos's behest. Through these
behest loans, large sums of money went to cronies' projects, including several that were not considered feasible. In 1984, a Monetary Board report discovered that the Central Bank overstated the country's dollar reserves by approximately $600 million, which was caused by anomalous transactions made to overseas branches of the
Philippine National Bank in a desperate effort to generate non-existent foreign exchange reserves to increase lending and credit creation. The Central Bank's financial stability was also undermined by large emergency loans that it made to failing institutions such as
Banco Filipino and financing of government deficits and loss-making assets, which eroded its
capital requirement. This eventually caused the Central Bank to become
insolvent, effectively becoming
bankrupt. into law on June 14, 1993. Taking on the reins of the bankrupt Central Bank, the new law provided for the establishment of an independent monetary authority to be known as the "
Bangko Sentral ng Pilipinas", with its primary objective being the maintenance of price stability, which was previously only implied in the old Central Bank charter. The law also gives the
Bangko Sentral fiscal and administrative autonomy which the old Central Bank did not have. On July 3, 1993, the New Central Bank Act took effect. The website was promptly restored in the early hours of the following day. On April 23, 2013,
The Asian Banker named the BSP as the Best Macroeconomic Regulator in the Asia-Pacific Region for 2013 in
The Asian Banker Leadership Achievement Awards in
Jakarta, Indonesia. The BSP was cited as a "good, strong, and fair-minded regulator." About a month later, the BSP was given the country award by the Child and Youth Finance International in its 2013 International Summit in
Istanbul, Turkey, in recognition of its initiative to integrate
financial literacy education into the
Philippine elementary school curriculum. In 2019, President
Rodrigo Duterte signed R.A. 11211 (principally authored by
Franklin Drilon), further increasing the Bank's capitalization to ₱200 billion. ==Roles and responsibilities==