Portal de Periódicos da CAPES

Central Banking in the Philippines

1948; University of British Columbia; Volume: 21; Issue: 4 Linguagem: Inglês

10.2307/2751838

1715-3379

Andrés Villegas Castillo,

Philippine History and Culture

W5 TITH the advent of Philippine independence, the Filipino people realized that their newly-won political freedom would be meaningless unless it were accompanied by economic independence. After July 4, 1946, therefore, steps were taken to remodel the Philippine economy. One of the important government instrumentalities intended to accomplish this objective is the Central Bank, which is scheduled to open soon for business. The Central Bank Act, recently passed by the Congress, provides not only fot modernization of the banking system but also for revision of the monetary system. The present Central Bank Act is the third law to have been passed providing for the establishment of a Central Bank in the Philippines. The first law, of 1939, was considered a monetary law and therefore required the approval of the President of the United States before it could take effect. It met strong opposition from vested interests, and the President chose not to approve it. The second law was passed in 1944 during the Japanese occupation, but the liberation forces arrived before it could be implemented. When the establishment of a Central Bank was officially proposed in i opinion was divided as to the necessity for such an institution. It was argued that the currency system, which conservative financiers regarded as one of the pillars of Philippine economic stability, was serving the country well; to tamper with it would be to move in the wrong direction. The Philippine National Bank, a government institution, could, it was held, very well perform the functions of a central bank; all that was needed was the creation of a division in it to rediscount commercial paper. The failure of other countries to discover a satisfactory substitute for a central bank, however, helped to decide the issue in favor of establishing an institution that would perform traditional central banking functions. Since the Philippine currency system was at that time still linked to that of the United States, American experience in central banking