PHILIPPINE MONEY

Importance of Money

• Money simplifies matters– Medium of exchange– Standard of value– Store of value– Standard of deferred payment

• Money contributes to economic development and growth

Classifications of Money

• Money according to material used• Money according to the character of the

issuer• Money according to popularity• Money according to face value

Money according to material used

• Commodity money– Money can be metallic in nature.

• Precious metals like gold and silver are used as commodity money

– Money is used for the purposes other than as a medium of exchange if so desired like rice, salt, sugar and the like satisfying physiological needs

• Paper money– High quality paper materials are used to stand a long

period of time and to minimize counterfeiting• Bank money– These are checks or other paper notes issued by financial

intermediaries

Money according to the character of the issuer

• Treasury money– Those issued by the National Treasury before 1949. they

are notes and coins of various denominations• Central Bank money– Those issued by the Central Bank after 1949. they are the

Central Bank’s notes and coins circulating in the Philippines

• Commercial bank money– Those issued by the Philippine National Bank and other

commercial banks serving as promises to pay, legal tender, payable on demand or future time to bearer or order.

Money according to popularity

• Paper money– Have no commodity value

• Fiat money– They are inconvertible paper money with no reserve– Also called credit or fiduciary money– Face value if higher than the value of paper-material used

• Subsidiary coins– Representative-full bodied money made of base metals to

settle small transactions. – Not advisable for use in big transactions thereby having

limited legal tender power.

Money according to face value

• Standard money– This is full-bodied money, authorized by law,

where the weight, fineness, denominations and designs are prescribed by the government as standard basis for coinage.

Important concepts

• Mint – the place for manufacture of money• Minting – or coining or coinage is the process of

manufacturing money• Kinds of coinage:– Free coinage – the government defines sizes,

shapes, weight and designs of coins but allows people to bring their precious metal to the mint to convert such into standard coins.• People or owners of these metals are charge with

brassage or seigniorage fee.

Important concepts

• Kinds of coinage:– Gratuitous coinage – total responsibility for

minting is borne by the government– Limited coinage – government purchases precious

metal in an open market and mint them as a medium of exchange at face value higher than material content to facilitate trade.

Monetary System

• In any country the monetary system consists of the aggregate of money in use, the values of the various types of money being organically related to one another in both formal and substantive ways.

• In a system, there is a standard money and unit of account and every type of money is either a multiple or sub-multiple of that unit, that is, there are various ‘denominations’.

• There is provision for converting one type of money into another, or redeeming fiduciary money by standard money, on a parity or other basis.

Monetary System

• The monetary system of a country is a national affair– The central government usually acquires a monopoly or

near control of the monetary affairs.– The monetary system in a country is determined by law

• Each country enacts its own coinage, banking and other monetary legislations.

• Stability of money is more frequently used to signify the constancy of its purchasing power over goods in general.

Kinds of Monetary Standards

• Monometallic standard– Gold standard• Gold coin standard• Gold bullion standard• Gold exchange standard

– Silver standard• Bimetallic standard• Fiat standard

Evolution of Philippine Money

Pre-Hispanic Era•Trade among the early Filipinos and with traders from the neighboring islands was conducted through barter.

•The inconvenience of barter later led to the use of some objects as medium of exchange.

₰ Gold₪Piloncitos - small bead-like gold bits considered by

the local numismatists as the earliest coin of the ancient Filipinos

₪gold barter rings.

Spanish Era1521-1897

• Three hundred years of Spanish rule left many indelible imprints on Philippine numismatics. At the end of the Spanish regime, Philippine money was a multiplicity of currencies that included Mexican pesos, Alfonsino pesos and copper coins of other currencies.

Spanish Era1521-1897

• The cobs or macuquinas of colonial mints were the earliest coins brought in by the galleons from Mexico and other Spanish colonies.

• The silver dos mundos or pillar dollar is considered one of the world’s most beautiful coins.

• The barilla, a crude bronze or copper coin worth about one centavo, was the first coin struck in the country.

Spanish Era1521-1897

• Coins from other Spanish colonies also reached the Philippines and were counterstamped.

• Gold coins with the portrait of Queen Isabela were minted in Manila.

• Silver pesos with the profile of young Alfonso XIII were the last coins minted in Spain.

• The pesos fuertes, issued by the country’s first bank, the El Banco Espanol Filipino de Isabel II, were the first paper money circulated in the country.

Revolutionary Period 1898-1899

• Asserting its independence, the Philippine Republic of 1898 under General Emilio Aguinaldo issued its own coins and paper currency backed by the country’s natural resources.

• One peso and five peso notes printed as Republika Filipina Papel Moneda de Un Peso and Cinco Pesos were freely circulated. 2 centimos de peso copper were also issued in 1899.

The American Period 1900-1941

• The Americans instituted a monetary system for the Philippine based on gold and pegged the Philippine peso to the American dollar at the ratio of 2:1. The US Congress approved the Coinage Act for the Philippines in 1903.

– The coins issued under the system bore the designs of Filipino engraver and artist, Melecio Figueroa. Coins in denomination of one-half centavo to one peso were minted.

– The renaming of El Banco Espanol Filipino to Bank of the Philippine Islands in 1912 paved the way for the use of English from Spanish in all notes and coins issued up to 1933. Beginning May 1918, treasury certificates replaced the silver certificates series, and a one-peso note was added.

The Japanese Occupation1942-1945

• The outbreak of World War II caused serious disturbances in the Philippine

monetary system. Two kinds of notes circulated in the country during this period.

₰ The Japanese Occupation Forces issued war notes in big denominations.

₰ Provinces and municipalities issued their own guerrilla notes or resistance currencies, most of which were sanctioned by the Philippine government in-exile, and partially redeemed after the war.

The Philippine Republic

• A nation in command of its destiny is the message reflected in the evolution of Philippine money under the Philippine Republic. Having gained independence from the United States following the end of World War II, the country used as currency old treasury certificates overprinted with the word “Victory”.

The Philippine Republic

• With the establishment of the Central Bank of the Philippines in 1949, the first currencies issued were the English series notes printed by the Thomas de la Rue & Co., Ltd. in England and the coins minted at the US Bureau of Mint.

• The Filipinization of the Republic coins and paper money began in the late 60’s and is carried through to the present.

The Philippine Republic

• In the 70’s, the Ang Bagong Lipunan (ABL) series notes were circulated, which were printed at the Security Printing Plant starting 1978. A new wave of change swept through the Philippine coinage system with the flora and fauna coins initially issued in 1983. These series featured national heroes and species of flora and fauna.

• The new design series of banknotes issued in 1985 replaced the ABL series. Ten years later, a new set of coins and notes were issued carrying the logo of the Bangko Sentral ng Pilipinas.

As the repository and custodian of country’s numismatic heritage, the Museo ng Bangko Sentral ng Pilipinas collects, studies and preserves coins, paper notes, medals, artifacts and monetary items found in the Philippines during the different historical periods. It features a visual narration of the development of the Philippine economy parallel to the evolution of its currency.

Laws on Philippine Monetary System

• Philippine Coinage Act of 1903• US Coinage Act of 1903• Gold Reserve Act of 1934• Dollar Exchange Standard• “Mickey Mouse” Notes• Managed Currency System

Philippine Coinage Act of 1903

• Defines our monetary system as follows:

– Gold coins contain 12.8 grains of gold and 0.9 fineness– Silver coins contain 416 grains of silver and 0.9 fineness

• The series of coins that resulted from this decision is often referred to as "CONANT COINS" after Charles A. Conant, an American monetary expert.

US Coinage Act of 1903

• Philippine money was redeemable in drafts or checks payable in full gold standard currency.

– In order to maintain value of peso with gold, a currency reserve fund known as “Gold Standard Fund” was set up.

Gold Reserve Act of 1934

• Under this monetary standard, the Philippine currency was not redeemable in gold but in dollars.

– Dollars devaluated by forty-one percent, and US government was given title to all gold coins, bullion and certificates held by Federal Reserve Banks.

Dollar Exchange Standard

• Philippine currency was redeemable in dollar instead of gold.

• Currency issued was backed up by silver coins, and dollars, on demand.

“Mickey Mouse” Notes

• The Japanese military government issued paper bills called “mickey mouse” notes, not because they were legal tender but because of fear from authorities on ground of non-cooperation. From 1946 to 1949, money supply increased tremendously.

Managed Currency System

• With the creation of Central Bank, the country’s monetary system and banking system were reorganized.

• Central Bank Act, known as Republic Act No. 265 was enacted.

– This placed bank in better position to meet the credit needs of existing business enterprises and credit requirements for new development projects.

– Central Bank Act defines the monetary unit as ‘peso’, sign is P, divided into one hundred equal parts called ‘centavo’ represented by ȼ sign.

Piloncitos and Gold Barter Rings

Macuquinas

Silver dos mundos or Pillar Dollar

Barilla

This uniface cast bronze (copper) piece signals the start of specifically Philippine coinage under Spain. It is inscribed at the center with the royal seal of the City of Manila, dated 1728 (perhaps its first year of issue) and labelled "BARILLA" (a name carried over to today's bariya meaning small change which it probably was at that time).

Counterstamped Coins

Gold Coins minted in Manila

Silver Coins minted in Madrid for Philippine Circulation

On the left is a set of silver coins of the Isabel II series in 50, 20 and 10 centimos de peso denomination all dated 1868. On the right is a similar set of the Alfonso XII series all dated 1885. All the above were minted by the Casa de Moneda de Manila. At center is the crown-size silver peso of Alfonso XIII dated 1897 which was minted in Madrid for Philippine circulation

Pesos Fuertes (P.F.) issued by El Banco Español Filipino de Isabel

Revolutionary Government CurrencyRevolutionary copper coin of 2 centimos de peso dated 1899. At 26 mm diameter, it is the smaller of two types of patterns / coins issued by President Emilio Aguinaldo. The larger version, also in copper and likewise dated 1899, is approximately 30 mm in diameter and bears the triangle of the Katipunan.

One Philippine Peso

American Period Philippine Currency

American Period Philippine Currency

Obverse and reverse of the famous 1906-S Philippine Peso (38 mm) designed and engraved by Melencio Figueroa and

minted in San Francisco, California. It is the most popular and the signature coin of the U.S. - Philippine Series

American Period Philippine Currency

Twenty Peso BanknoteAmerican Period Treasury Certificate

Japanese Period Philippine Currency

Japanese Period Philippine Currency

Emergency Notes during Japanese Occupation

Emergency note issued in Ilocos Norte Emergency note issued

in Aklan

Emergency note issued in Cebu

Victory Notes