Money& Monetary Policy Defined (Philippine Setting) 1.

Money can be defined as an object that is readilyaccepted from anybody as full payment for purchase of acertain commodity or for service rendered by an individual.This may take the form of metal coins, paper money issued bythe government, banks or personal checks. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 3. Barter System- the direct exchange of goods for goods, services forservices, goods for services and services for goods. It is the earliestsystem of trading. With the passage of time, the barter system presented difficulties which tended to slow down exchange. This lead to the use of one object as a medium of exchange for other goods came into use. This system can be known as Money Economy. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 4. 1. Burdensome2. Inconvenient due to difficulty in finding goods whichone directly needs.3. Does not have proper measure for the goods beingexchanged.4. Indivisibility of some goods Cmrmiranda PowerPoint Presentation November2011 Macro Economics 5. 1. Commodity Money2. Metallic Money3. Representative Money4. Paper Money5. Bank Drafts or Checks Cmrmiranda PowerPoint Presentation November2011 Macro Economics 6. It must be portable. It must have elasticity of supply.It must be homogenous. It must be stable in value.It must be durable.It must be recognizable.It must be divisible.It must be malleable.It must possess general acceptability. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 7. There are many uses or functions of money and these are money as a: Medium of Exchange. The money is the medium of exchangebecause it is always in the middle between the buyer and the seller. Standard Value. This is being performed when all articles orservices are given a value in terms of a certain number of units of oneparticular type of goods. Standard for Postponed Payments. Store of Value. It becomes a store value when an amount of it iskept for a period of time. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 8. The Monetary Unit This refers to the type of money expressed by law as thestandard value and the circulating medium. It is made of a particular metalor commodity with a fixed weight and fineness.The System of Coinage The government has undertaken sole responsibility for themanufacture of metals into coins to avoid difficulties such as varied sizesand shapes, designs, weights and counterfeiting.Circulating Media All matters related to the issuance, value, conversion andcontrol in the use of paper bills orPowerPoint Presentationare spelled out by the law Cmrmiranda metallic coins November2011 Macro Economics 9. Monetary Reserves Important in controlling credits. The security of thedepositors and as an instrument of control by the government in casesof economic instability due to too much credit or to an imbalance inforeign payments.Local Tender Quality Money *Legal Money Tender- a money which is declared by the lawas acceptable for payment of debts, both public and private. Cmrmiranda PowerPoint Presentation November2011 Macro Economics

10. Has several types namely;Monometallism. A commodity standard based on one metal.Bimetallism. Based on two metals which are standard money at a fixedvalue in terms of one another.Symmetalism. Based on a single metallic unit which is a mixture ofdifferent metals legally proportioned.Composite Commodity / Commodity Reserve Standard. Still on theplanning stage consists of an assorted list of staple commodities which willserve as the standard unit. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 11. The paper standard is one which does not use gold or any metal as thebasis of value. This is also called as Credit or Fiduciary Standard because it isdependent on the peoples trust in the government. *Flat Standard because the money circulation assumes its value bydecree of the government. *Money Paper Standard because the government supervises thecirculation of the money to the public. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 12. The Central Bank of the Philippines ischiefly responsible for the implementation ofour monetary policy and is the sole authorityon money matters as embodied in the Section2, Articles of the Amended Republic Act 265.It regulates the circulation of money in order tohelp trade and industry meet their needs. It isthe only agency which can issue money in thePhilippines and is responsible for maintainingthe stability of peso so it will always beaccepted within and outside the country as amedium of exchange. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 13. ESOCmrmiranda PowerPoint Presentation November2011 Macro Economics 14. Monetary Policy can be defined as set of guidelinesand plans of action designed to achieve stability andreliability of the financial system so that it automaticallyresponds and adjusts to the changes and dynamics of aneconomy. Cmrmiranda PowerPoint Presentation November2011 Macro Economics 15. The primary objective of the monetary policy is toprovide financial stability that promotes growth anddevelopment of the economy with minimal inflation.The success indicator of monetary policy is the rate ofinflation in lower result. Cmrmiranda PowerPoint Presentation November2011 Macro Economics