ARTICLE I.—Domestic Monetary Stabilization
SEC. 64. Guiding principles—The Monetary Board shall endeavor to control any expansion or contraction in the money supply, or any rise or fall in prices, which in the opinion of the Board is prejudicial to the attainment or maintenance of a high level of production, employment, and real income. In adopting policies and measures in accordance with this principle the Monetary Board shall have due regard for their effects on the availability and cost of money to particular sectors of the economy as well as to the economy as a whole, and their effects on the relationship of domestic prices and costs to world prices and costs.
Definition of the money supply.
SEC. 65. Definition of the money supply.— For the purposes of this section, and of this Act, the money supply is defined as consisting of all holdings of domestic currency and deposit money with the exception of such holdings by the Government and by banks having checking deposit liabilities in domestic currency. The statistics prepared by the Central Bank on the volume of the money supply shall be based cm this definition to the extent that available data permit.
Action when abnormal movements occur in the money supply or price level.
SEC. 66. Action when abnormal movements occur in the money supply or price level.— Whenever abnormal movements in the money supply or in prices endanger the stability of the Philippine economy or important sectors thereof, the Monetary Board shall:
(a) Take such remedial measures as are appropriate and within the powers granted to the Monetary Board and the Central Bank under the provisions of this Act; an
(b) Submit to the President of the Philippines and the Congress, and make public, a detailed report which shall include, as a minimum, a description and analysis of:
(1) The causes of the rise or fall of the money supply or of prices;
(2) The extent to which the changes in the money supply or in prices have been reflected in changes in the level of domestic output, employment, wages and economic activity in general, and the nature and significance of any such changes; and
(3) The measures which the Monetary Board has taken and the other monetary fiscal or administrative measures which it recommends be adopted.
Whenever the money supply increases or decreases by more than fifteen per cent (15%), or the cost of living index increases by more than ten per cent (10%), in relation to the level existing at the end of the corresponding month, of the preceding year, the Monetary Board shall submit the report to which reference is made in subsection (b) of this section, and shall state therein whether, in the opinion of the Board, said changes in the money supply or cost of living represent a threat into the stability of the Philippine economy or of important sectors thereof.
The Monetary Board shall continue to submit periodic reports to the President of the Philippines until it considers that the monetary or price disturbances have disappeared or have been adequately controlled.
ARTICLE II.—International Monetary Stabilization
Guiding principle.
SEC. 67. Guiding principle.—The Central Bank of the Philippines shall exercise its powers under this Act to maintain the par value of the peso and the convertibility of the peso into other freely convertible currencies.
International reserve.
SEC. 68. International reserve.—In order to maintain the International stability and convertibility of the Philippine peso, the Central Bank shall maintain an international reserve adequate to meet any foreseeable net demands on the Bank for foreign currencies.
In judging the adequacy of the international reserve, the Monetary Board shall be guided by the prospective receipts and payments of foreign exchange by the Philippines. The Board shall give special attention to the volume and maturity of the Central Bank's own liabilities in foreign currencies, to the volume and maturity of the foreign exchange assets and liabilities of other banks operating in the Philippines and, insofar as they are known or can be estimated] the volume and maturity of the foreign exchange assets and liabilities of all other persons and entities in the Philippines.
Composition of the international reserve.
SEC. 69. Composition of the international reserve.—The international reserve of the Central Bank of the Philippines may include the following assets:
(a) Gold; and
(b) Assets in foreign currencies in the form of: documents and instruments of types customarily employed for the international transfer of funds; demand and time deposits in central banks, treasuries and commercial banks abroad; foreign government securities with maturities not, exceeding five yeans; and foreign notes and coins.
The Monetary Board shall endeavor to hold the foreign exchange resources of the Central Bank in freely convertible currencies; moreover, the Board shall give particular consideration to the prospects of continued strength and convertibility of the currencies in which the reserve is maintained, as well as to the anticipated demands for such currencies. The Monetary Board shall issue regulations determining the other qualifications which foreign exchange assets must meet in order to be included in the international reserve of the Central Bank.
The Central Bank shall be free to convert any of the assets in its international reserve into any other asset of a type included under subsections (a) and (b) of this section.
Action when the international stability of the peso is threatened.
SEC. 70. Action when the international stability of the peso is threatened.—Whenever the international reserve of the Central Bank falls to an amount which the Monetary Board considers inadequate to meet the prospective net demands on the Central Bank for foreign currencies, or whenever the international reserve appears to be in imminent danger of falling to such a level, or whenever the international reserve is falling as a result of payments or remittances abroad which, in the opinion of the Monetary Board, are contrary to the national welfare, the Monetary Board shall:
(a) Take such remedial measures as are appropriate and within the powers granted to the Monetary Board and the Central Bank under the provisions of this Act; and
(b) Submit to the President of the Philippines a detailed report which shall include, as a minimum, a description and analysis of:
(1) The nature and causes of the existing or imminent decline;
(2) The remedial measures already taken or to be taken by the Monetary Board;
(3) The further monetary, fiscal or administrative measures proposed; and
(4) The character and extent of the cooperation required from other Government agencies for the Successful execution of the policies of the Monetary Board.
If the resultant actions fail to check the deterioration of the reserve position of the Central Bank, or if the deterioration cannot be checked except by chronic restrictions on exchange and trade transactions or by sacrifice of the domestic objectives of a high level of production, employment and real income, the Monetary Board shall propose to the President such additional action as it deems necessary restore equilibrium in the international balance of payments of the Philippines.
The Monetary Board shall submit periodic reports to the President until the threat to the international monetary stability of the Philippines has disappeared.
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).
