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Means of action.
SEC. 71. Means of action.—In order to achieve the1 international and domestic objectives, of the national monetary policy, the Monetary Board shall rely on its moral influence, the powers granted to it under this Act for the regulation of money, credit and exchange, and the support and cooperation of the Government and all its agencies.
Purchases and sales of gold.
SEC. 72. Purchases and sales of gold.—The Central Bank may buy and sell gold in any form, subject to such regulations as the Monetary Board may issue. The Monetary Board may at any time require that any gold held by any person or entity under the jurisdiction of the Philippines be delivered to the Central Bank or to any banks or other agents contracted or engaged by the Central Bank for the purpose. The Monetary Board may also impose conditions under which gold in any shape or form may be acquired and held, transported, melted or treated, imported, exported, earmarked or held in custody for foreign or domestic account. The purchases and sales of gold authorized by this section shall be made in national currency and at rates which do not differ from the par value of the peso by more than the margins established by the International Monetary Fund.
Purchases and sales of foreign exchange.
SEC. 73. Purchases and sales of foreign exchange.—The Central Bank may buy and soil foreign notes and coins, and documents and instruments of types customarily employed for the international transfer of funds. The Bank may engage in future exchange operations. The Central Bank may engage in foreign exchange transactions with the following entities only: (a) Banking institutions operating in the Philippines; (b) The Government, its political subdivisions and instrumentalities; (c) Foreign or international financial institutions; and (d) Foreign governments and their instrumentalities. In order to maintain the convertibility of the peso, the Central Bank shall, at the request of any banking institution operating in the Philippines, buy any quantity of foreign exchange offered, and sell any quantity of foreign exchange demanded, by such institution, provided that the foreign currencies so offered or demanded are freely convertible into gold or United States dollars. This requirement shall not apply to demands for foreign notes and coins. The Central Bank shall effect its exchange transactions between foreign currencies and the Philippine peso at the rates determined in accordance with the provisions of section 76.
Emergency restrictions on exchange operations.
SEC. 74. Emergency restrictions on exchange operations.—Notwithstanding the provisions of the third paragraph of the preceding section, in order to protect the international reserve of the Central Bank during an exchange crisis and to give the Monetary Board and the Government time in which to take constructive measures to combat such a crisis, the Monetary Board, with the concurrence of at least five of its members, and with the approval of the President of the Philippines, may temporarily suspend or restrict sales of exchange by the Central Bank and may subject all transactions in gold and foreign exchange to license by the Central Bank. The adoption of the emergency measures authorized in this section shall be subject to any executive and international agreements to which the Republic of the Philippines is a party.
Acquisition of inconvertible currencies.
SEC. 75. Acquisition of inconvertible currencies.—The Central Bank shall avoid the acquisition and holding of currencies which are not freely convertible, and may acquire such currencies in an amount exceeding the minimum balance necessary to cover current demands for said currencies only when, and to the extent that, such acquisition is considered by the Monetary Board to be in the national interest. The Monetary Board shall determine the procedures which shall apply to the acquisition and disposition by the Central Bank of foreign exchange which is not freely utilizable in the international market.
Exchange rates.
SEC. 76. Exchange rates.—The Monetary Board shall determine the rates at which the Central Bank shall buy and sell spot exchange, but said rates shall not differ by more than one-half of one per cent from the legal parities established in section 50, unless in any given case a greater divergence from the legal parity exists in foreign markets. The Central Bank shall not collect any additional commissions or charges of any sort, other than actual telegraphic or cable costs incurred by it. The Monetary Board shall similarly determine the rates for other types of foreign exchange transactions by the Central Bank, including purchases and sales of foreign notes and, coins, but the margins between the legal parities and the rates thus established may not exceed the corresponding margins for spot exchange transactions by more than the additional costs or expenses involved in each type of transaction.
Revaluation profits and losses on Central Bank's international assets.
SEC. 77. Revaluation profits and losses on Central Bank's international assets.—The profits or losses arising from any revaluation of the Central Bank's net assets or liabilities in gold or foreign currencies as a result of changes in the gold value of the peso, or of changes in the parities or exchange rates of foreign currencies with respect to the Philippine peso, shall be distributed in the manner provided in section 44 of thus Act.
Operations with foreign entities.
SEC. 78. Operations with foreign entities.—The Central Bank of the Philippines may grant loans to and receive loans from foreign banks and other foreign or international entities, both public and private, and may engage in such other operations with these entities as are in the national interest and are appropriate to its character as a central bank. The Central Bank may also act as agent or correspondent for such entities. The Central Bank may pledge any gold or other assets which it possesses as security against loans which it receives from foreign or international entities.
Rates applicable to purchases and sales of exchange by the Banks.
SEC. 79. Rates applicable to purchases and sales of exchange by the Banks.—The Monetary Board shall determine the minimum and maximum rates at which, the banks may buy spot exchange, and the maximum and minimum rates at which they may sell spot exchange, but the rates thus established for each currency shall not differ from the respective legal parity by more than one per cent, unless in any given case a greater divergence from parity exists in foreign markets. The banks shall not collect any additional commissions or charges other than actual telegraphic or cable costs incurred by them. The rates to be used by the banks for other types of exchange transactions shall be based on their spot exchange rates and shall not differ from such rates by margins greater than those considered reasonable by the Monetary Board: Provided, however, That the Board may at any time specifically fix such margins. The Monetary Board shall issue such rules and regulations as may be necessary to implement the provisions of this paragraph. The rates established in accordance with the provisions of this section shall not apply to exchange transactions with the Central Bank. Such transactions shall be made at the rates established in accordance with the provisions of section 76 of this Act.
Foreign exchange holdings of the banks.
SEC. 80. Foreign exchange holdings of the banks.—In order that the Central Bank may at all times have foreign exchange resources sufficient to enable it to maintain the international stability and convertibility of the peso, or in order to promote the domestic investment of bank resources, the Monetary Board may require the banks to sell the Central Bank all or part of their surplus holdings of foreign exchange. Such transfers may be required for all foreign currencies or for only certain of such currencies, according to the decision of the Monetary Board. The Transfers shall be made at the rates established under the Provisions of section 76 of this Act. For the purposes of this Act, surplus holdings of any foreign currency shall be defined as the amount by which a bank's assets in the currency exceed the sum of the working balance required to accommodate normal short run fluctuations between the bank's sales and purchases of said currency and the total liabilities of the bank in i the currency: Provided, however, That in calculating surplus holdings in any given currency, a bank may, at the discretion of the Monetary Board, subtract from its net assets in that currency an amount equal to any net liabilities of the bank in other currencies into which said currency is freely convertible. The Monetary Board may stipulate' that the working balance to which reference is made in the preceding paragraph shall not exceed a specified proportion of the average daily sales of the respective currency by the bank to entities other than the Central Bank during the preceding month. Any proportion thus established by the Monetary Board, and any requirement to transfer foreign exchange to the Central Bank, shall be applied to all banks alike and without discrimination.
Requirement of balanced currency position.
SEC. 81. Requirement of balanced currency position.— The Monetary Board may require the banks to maintain a balanced position between their assets and liabilities in] Philippine pesos or in any other currency or currencies in which they operate. The banks shall be granted a reasonable period of time in which to adjust their currency positions to any such requirement. The powers granted under this section shall be exercised only when special circumstances make such action necessary, in the opinion of the Monetary Board, and shall be applied to all banks alike and without discrimination.
Regulation of non-spot exchange transactions.
SEC. 82. Regulation of non-spot exchange transactions.— In order to restrain the banks from taking speculative positions with respect into future fluctuations in foreign exchange rates, the Monetary Board may issue such regulations governing bank purchases and sales of non-spot exchange as it may consider necessary for said purpose.
Revaluation profits and losses on bank’s holdings of gold and foreign exchange.
SEC. 83. Revaluation profits and losses on bank’s holdings of gold and foreign exchange.—Any revaluation profits realized or losses suffered by the banks on their net assets or liabilities in gold or freely convertible foreign currencies as a result of changes in the par value of the peso, in the legal parities between the Philippine peso and such foreign currencies, or in the Central Bank's exchange rates for such currencies, shall be for the account of the Central Bank in their entirety. The Monetary Board may at any time declare that revaluation profits or losses on banks' net holdings of any foreign currency other than those included under the provisions of the first paragraph of this section shall also be for the account of the Central Bank until such time as the Board gives notice to the contrary. Said notice shall be communicated, to the banks at least eight days before the date on which the revaluation risks cease to be for the account of the Central Bank, however, and shall apply only to acquisitions of the specified foreign currency subsequent to said date. The Board shall issue appropriate regulations to restrain the banks from increasing their holdings of the specified currency during the period from the date of the notice to the date on which it becomes effective". The Monetary Board shall issue such rules and regulations as may be necessary to administer the provisions of this section.
Other exchange losses.
SEC. 84. Other exchange losses.— The banks shall bear the risks of non-compliance with the terms of the foreign exchange documents and instruments which they buy or sell, and shall also bear any other typically commercial or banking risks, including exchange risks not assumed by the Central Bank under the provisions of the preceding section.
Information on exchange operations.
SEC. 85. Information on exchange operations.—The banks shall report to the Central Bank of the Philippines the volume and composition of their purchases and sales of gold and foreign exchange each day, and must furnish such additional information as the Central Bank may request with reference to the movements in their accounts in foreign currencies. The Monetary Board may also require other persons and entities to report to it currently all transactions or operations in gold, in any shape or form, and in foreign exchange. The Monetary Board shall prescribe the forms on which such declarations must be made. The accuracy of the declaration may be verified by the Central Bank by whatever inspection it may deem necessary.
Guiding principles.
SEC. 86. Guiding principles.—The rediscounts, discounts, loans and advances which the Central Bank is authorized to extend to banking institutions under the provisions of the present article of this Act shall be used to regulate the volume, cost availability and character of bank credit and to provide the banking system with liquid funds in times of need. In periods of inflation, or as long as inflationary dangers exist, the Central Bank shall refrain from extending credit to banks and at such times shall grant credit only in exceptional cases where special circumstances justify a deviation from the principle stated herein. Conversely, whenever the national monetary policy requires an expansion of the money supply, the Central Bank shall make full use of the credit operations authorized under the present article of this Act. B. NORMAL CREDIT OPERATIONS
Authorized types of operations.
SEC. 87. Authorized types of operations.—Subject to the principles stated in the preceding section of this Act, the Central Bank may normally and regularly carry on the following credit operations with banking institutions operating in the Philippines: (a) Commercial credits.—The Central Bank may rediscount, discount, buy and sell bills, acceptances, promissory notes and other credit instruments with maturities of not more than 180 days from the date of their rediscount, discount or acquisition by the Central Bank and resulting from transactions related to: (1) The importation, exportation, purchase or sale of readily salable goods and products, or their transportation within the Philippines; or (2) The storing of nonperishable goods and products which are duly insured and deposited, under conditions assuring their preservation, in authorized bonded warehouses or in other places approved by the Monetary Board. (b) Production credits. —The Central Bank may rediscount, discount, buy and sell bills, acceptances, promissory notes and other credit instruments having maturities of not more than 270 days from the date of their rediscount, discount or acquisition by the Central Bank and resulting from transactions related to the production or processing of agricultural, animal, mineral or industrial products. Documents or instruments acquired in accordance with this subsection shall be secured by a pledge of the respective crops or products. (c) Advances.—The Central Bank may grant advances against the following kinds of collateral for fixed periods which, with the exception of advances against the collateral named in clause (4) of the present subsection, shall not exceed I8O days: (1) Gold coins or bullion; (2) Securities representing obligations of the Central Bank or of other domestic credit institutions of recognized solvency; (3) The credit instruments to which reference is made in subsection, (a) of this section; (4) The credit instruments to which reference is made in subsection (b) of this section, for periods which shall not exceed 270 days; (5) Utilized portions of advances in current account covered by regular overdraft agreements related to operations included under subsections (a) and (b) of this section, and certified as to amount and liquidity by the institution soliciting the advance; (6) Negotiable treasury bills, certificates of indebtedness, notes and other negotiable obligations of the Government maturing within three years from the date of .the advance; and (7) Negotiable bonds issued by the Government of the Philippines, by Philippine provincial, city or municipal governments, or by any Philippine Government instrumentality, and having maturities of not more than ten years from the date of the advance. The rediscounts, discounts, loans and advances made in accordance with the provisions of this section may not be renewed or extended unless extraordinary circumstances fully justify such renewal or extension. Advances made against the collateral named in clauses (6) and (7) of subsection (c) of this section may not exceed; 80 per cent of the current market value of the collateral. C. EXTRAORDINARY CREDIT OPERATIONS
Loans to mortgage, institutions.
SEC. 88. Loans to mortgage, institutions.— Under special circumstances in which the Monetary Board considers it advisable to promote or facilitate the lending operations, or certain classes thereof, of savings banks, building and loan associations, or of the Rehabilitation Finance Corporation, the Central Bank may grant loans or advances with maturities of not more than, one year to said institutions against pledge or assignment of payments, installments or amortizations of their borrowers coming due within the twelve months from the date of the granting of such loans or advances, and in an amount not exceeding forty per cent of the payments, installments or amortizations pledged or assigned: Provided, however, That the Central Bank shall not make such loans or advances whenever such action would aggravate or contribute to inflationary tendencies existing in the economy. In granting loans and advances under this section, the Central Bank shall first ascertain that the payments, installments and amortizations to be pledged or assigned to it are in no case currently in arrears and that said payments, installments and amortizations are related to credit operations which in every case are adequately secured by mortgages. Said mortgages shall be assigned to the Central Bank.
Extension of maturities.
SEC. 89. Extension of maturities.—Whenever, in the opinion of the Monetary Board, a deflationary situation exists which requires special expansionary credit measures, the Central Bank may extend the maximum maturities of new credit operations granted under the provisions of subsections (a), (b) and (c) of section 87 to periods not exceeding one year. D. EMERGENCY CREDIT OPERATIONS
Emergency loans and advances.
SEC. 90. Emergency loans and advances.—In periods of emergency or of imminent financial panic which directly threaten monetary and banking stability, the Central Bank may grant banking institutions extraordinary advances secured by any assets which are defined as acceptable security by a concurrent vote of at least five members of the Monetary Board. While such advances are outstanding, the debtor institution may not expand the total volume of its loans or investments without the prior authorization of the Monetary Board. E. CREDIT TERMS
Interest and rediscount rates.
SEC. 91. Interest and rediscount rates.—The Monetary Board shall fix the interest and rediscount rates to be charged by the Central Bank on its credit operations in accordance with the character and term of the operation, but after due consideration has been given to the credit needs, of the market, the composition of the Central Bank's portfolio, .and the general requirements of the national monetary policy.
Endorsement.
SEC. 92. Endorsement.—The documents rediscounted, discounted, bought or accepted as collateral by the Central Bank in the course of the credit operations authorized in this article must bear the endorsement of the institution from which they are received.
Repayment of credits.
SEC. 93. Repayment of credits.—Documents rediscounted, discounted or accepted as collateral by the Central Bank must be withdrawn by the borrowing institution on the dates of their maturities, or upon liquidation of the obligations which they represent or to which they relate whenever said obligations have been liquidated prior to their dates of maturity. Banks shall have the right at any time to withdraw any documents which they have presented to the Central Bank as collateral, upon payment in full of the corresponding debt to the Bank, including interest charges.
Other requirements.
SEC. 94. Other requirements.—The Monetary Board may prescribe, within the general powers granted to it under this Act, additional conditions which borrowing institutions must satisfy in order to have access to the credit of the Central Bank. These conditions may refer to the rates of interest charged by the banks, to the purposes for which their loans in general are destined, and to any other clearly definable aspect of the credit policy of the bank.
Provisional advances to the Government.
SEC. 95. Provisional advances to the Government.—The Central Bank may make direct provisional advances to the Government or to any of its political subdivisions to finance expenditures authorized in the annual appropriations of the borrowing entity: Provided, That said advances must be repaid before the end of the first quarter following the end of the fiscal year of the Government or political subdivision and shall not, in their aggregate, exceed fifteen per cent of the average annual income of the borrower for if the last three preceding years.
Principles of open market operations.
SEC. 96. Principles of open market operations.—The open market purchases and sales of securities by the Central Bank shall be made exclusively for the purpose of achieving the objectives of the national monetary policy and shall be limited to the operations authorized in sections 97 and 98 of this Act. Accordingly in periods of inflation or as long as inflationary dangers exist, the Central Bank shall refrain from open market purchases and at such times shall endeavor to reduce its security holdings and/or to sell the evidences of indebtedness which it is permitted to issue under the provisions of section 98 of this Act. Conversely, whenever the national monetary policy requires an expansion of the money supply, the Central Bank may repurchase its own evidences of indebtedness prior to their date of maturity, as authorized in section 98, and may acquire the securities to which reference is made dm section 97. In purchasing said securities, the Central Bank shall give preference to short-term obligations, in order that the Bank may be in a better position to reduce the money supply should conditions in the future so require. Whenever securities meeting the conditions established in section 97 of this Act represent obligations in foreign currencies, the decisions of the Monetary Board to purchase and sell such securities shall be governed by the adequacy of the international reserve of the Central Bank and by the effect which such operations would have on the balance of payments and the volume of the money supply.
Purchases and sales of Government securities.
SEC. 97. Purchases and sales of Government securities.— In order to achieve the objectives of the national monetary policy, the Central Bank may, in accordance with the principles stated in section 96 of this Act and with such rules and regulations as may be prescribed by the Monetary Board, buy and sell in the open, market for its own account: (a) Evidences of indebtedness issued directly by the Government of the Philippines or by its political subdivisions, and (b) Evidences of indebtedness issued by Government instrumentalities and fully guaranteed by the Government. The evidences of indebtedness acquired under the provisions of this section must be freely negotiable and regularly serviced.
Issue and negotiation of Central Bank obligations.
SEC. 98. Issue and negotiation of Central Bank obligations.—In order to provide the Central Bank with effective instruments for open market operations, the Bank may, subject to such rules and regulations as the Monetary Board may prescribe and in accordance with the principles stated in section 96 of this Act, issue, place, buy and sell freely negotiable evidences of indebtedness of the Bank. Said evidences of indebtedness may be issued directly against the international reserve of the Bank or against the securities which it has acquired under the provisions of section 97 of this Act, or may be issued without relation to specific types of assets of the Bank. The Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of the Bank, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies. Subject to the principles stated in section 96 of this Act, the evidences of indebtedness of the Central Bank to which this section refers may be acquired by the Bank before their maturity, either through purchases in the open market or through redemptions at par and by lot if the Bank has reserved the right to make such redemptions. The evidences of indebtedness acquired or redeemed by the Central Bank shall not be included among its assets, and shall be immediately retired and cancelled.
Review of the Central Bank's portfolio.
SEC. 99. Review of the Central Bank's portfolio.—At least once every month the Monetary Board shall review the portfolio of the Central Bank in relation to the Bank's future credit policy. In reviewing the Central Bank's portfolio, the Monetary Board shall especially consider whether a sufficiently large part of the portfolio consists of assets with early maturities, in order that a contraction in Central Bank credit may be effected promptly whenever the national monetary policy so requires.
Reserve requirements.
SEC. 100. Reserve requirements.—In order to control the volume of money created by the credit operations of the banking system, banks operating in the Philippines shall be required to maintain reserves against their deposit liabilities. The required reserves of each bank shall be proportional to the volume of its deposit liabilities and shall ordinarily take the form of a deposit in the Central Bank of the Philippines; nevertheless, the Monetary Board may, whenever circumstances warrant, permit the maintenance of part of the required reserves in the form of assets other than peso deposits with the Central Bank. Reserve requirements shall be applied to all banks uniformly and without discrimination.
Required reserves against peso deposits.
SEC. 101. Required reserves against peso deposits.—The Monetary Board is authorized to prescribe and modify the minimum reserve ratios applicable to each class of peso deposits: Provided, however, That such ratios shall not be less than live per cent (5%) or more than twenty-live per cent (25%) for time and savings deposits, and shall not be less than ten per cent (10%) or more than fifty per cent (50%) for demand deposits. Notwithstanding the provisions of the preceding paragraph of this section, the Monetary Board may, in periods of inflation, prescribe higher reserve ratios, but not exceeding 100 per cent, for any future increase in the deposits of each bank above the amounts outstanding on the date on which the bank is notified of the requirement. Whenever the reserve requirements established by the Monetary Board place any bank under obligation to maintain minimum reserves in excess of twenty-five per cent (25%) of its total time or savings deposits, or in excess of fifty per cent (50%) of its total demand deposits, the Central Bank may pay interest on said excess at a rate which shall not be higher than the Bank's lowest rediscount rate.
Required reserves against foreign currency deposits.
SEC. 102. Required reserves against foreign currency deposits.—The Monetary Board is similarly authorized to prescribe and modify the minimum reserve ratios applicable to deposits denominated in foreign currencies: Provided, however, That such ratios may not be set below ten per cent (10%) or above one hundred per cent (100%), with respect to deposit liabilities in each foreign currency. The Monetary Board shall determine the form and the currency, either national or foreign, in which such reserves shall be maintained: Provided, however, That any such requirements shall not preclude the banks from keeping a balanced position between their assets and liabilities in each of the foreign currencies in which they operate.
Reserves against unused balances of overdraft lines.
SEC. 103. Reserves against unused balances of overdraft lines.— In order to facilitate Central Bank control over the volume of bank credit, the Monetary Board may establish minimum reserve requirements for unused balances of overdraft lines. The power is of the Monetary Board to prescribe and modify reserve requirements against unused balances of over-draft lines shall be the same as its powers with respect to reserve requirements against demand deposits.
Increase in reserve requirements.
SEC. 104. Increase in reserve requirements.—Whenever it becomes necessary, in the opinion of the Monetary Board, to increase reserve requirements against existing liabilities, the increase shall be made in a gradual manner and shall not exceed four percentage points in any thirty-day period. The banks shall be notified reasonably in advance of the date on which such increase is to become effective.
Computation on reserves.
SEC. 105. Computation on reserves.—The reserve position of each bank shall be calculated daily on the basis of the amount, at the close of business for the day, of the bank's reserves and the amount of its liability accounts against which reserves are required to be maintained. For the purpose of computing the reserve position of each bank, its principal office in the Philippines and all its branches and agencies located therein shall be considered as a single unit.
Reserve deficiencies.
SEC. 106. Reserve deficiencies.— Whenever the reserve position of any bank, computed in the manner specified in the preceding section of this Act, is below the required minimum, the bank shall pay the Central Bank one tenth of one per cent (1/10 of 1%) per day on the amount of the deficiency: Provided, however, That banks shall ordinarily be permitted to offset any reserve deficiency occurring on one or more days of the week with any excess reserves which they may hold on other days of the same week and shall be required to pay the penalty only on the average daily deficiency during the week. In cases of abuse, the Monetary Board may deny any bank the privilege of offsetting reserve deficiencies in the aforesaid manner. If a bank chronically has a reserve deficiency, the Monetary Board may limit or prohibit the making of new loans or investments by the bank and may require that part or all of the met profits of the bank be assigned to surplus.
Interbank settlements.
SEC. 107. Interbank settlements.—The Central Bank shall provide facilities for interbank clearing. The deposit reserves maintained by the banks in the Central Bank, in .accordance with the provisions of section 100, shall serve as a basis for the clearing of checks and the settlement of interbank balances, subject to such rules and regulations as the Monetary Board may issue with respect to such operations.
Guiding principle.
SEC. 108. Guiding principle.—The Monetary Board shall use the powers granted to it under the present article and elsewhere in this Act to ensure that the supply availability and cost of money are in accord with the needs of the Philippine economy and that bank credit is not granted for speculative purposes prejudicial to the national interests.
Interest rates, commissions and charges.
SEC. 109. Interest rates, commissions and charges.— The Monetary Board may fix the maximum rates of interest which banks may pay on deposits and on any other obligations. The Monetary Board may, within the limits prescribed in the Usury Law (Act No. 2655, as amended), fix the maximum rates of interest which banks may charge for different types of loans and for any other credit operations, or may fix the maximum differences which may exist between the interest or rediscount rates of the Central Bank and the rates which the banks may charge their customers if the respective credit documents are not to lose their eligibility for rediscount or advances in the Central Bank. Any modifications in the maximum interest rates permitted for the borrowing or lending operations of the banks shall apply only to future operations and not to those made prior to the date on which the modification becomes effective. In order to avoid possible evasion, of maximum interest rates set by the Monetary Board, the Board may also fix the maximum rates that banks may pay to or collect from their customers in the form of commissions, discounts, charges, fees or payments of any sort.
Margin requirements against letters of credit.
SEC. 110. Margin requirements against letters of credit.— In order to restrict the granting of bank credit for purposes which are contrary to the general welfare of the Philippines, the Monetary Board may at any time prescribe minimum cash margins for the opening of letters of credit, and may relate the size of the required margin to the nature of the transaction to be financed. The Board may particularly use its powers under this section to require high margins for the opening of letters of I credit to finance the importation of luxuries or other non-essential goods, or to finance any goods the importation of which at the time is considered by the Monetary Board to be unduly prompted by speculative motives prejudicial to the interests of the Philippine economy.
Required security against bank loans.
SEC. 111. Required security against bank loans.—In order to promote the liquidity and solvency of the banking system, or to influence the availability of bank credit for specific purposes, the Monetary Board may issue such regulations as it may deem necessary from time to time with respect to the maximum permissible maturities of the loans and investments which the banks may make, and the kind and amount of security to be required against the various types of credit operations of the banks.
Portfolio ceilings.
SEC. 112. Portfolio ceilings.— Whenever the Monetary Board considers it advisable to prevent or check an expansion of bank credit, the Board may place an upper limit on the amount of loans and investments which the banks hold, or may place a limit on the rate of increase of such assets within specified periods of time. The Monetary Board may apply such limits to the loans and investments of each bank or to specific categories thereof. In no case shall the Monetary Board establish limits which are below the value of the loans or investments of the banks on the date on which they are notified of such restrictions. The restrictions shall be applied to all banks uniformly and without discrimination.
Minimum capital ratios.
SEC. 113. Minimum capital ratios.—In order to regulate the volume and distribution of bank credit, and to ensure the maintenance of bank capital and surplus at levels adequate to protect the depositors against risk of loss, the Monetary Board may prescribe minimum ratios which the capital and surplus of the banks must bear to the volume of their assets, or to specific categories thereof, and may alter said ratios whenever it deems it convenient so to do.
Co-ordination of credit policies.
SEC. 114. Co-ordination of credit policies.—Government-owned corporations which perform banking or credit functions are hereby declared to be instruments of the national monetary policy and, accordingly, shall co-ordinate their general credit policies with those of the Monetary Board. Toward this end, the Monetary Board may, whenever it deems it expedient, make suggestions or recommendations to such corporations for the more effective co-ordination of their policies with those of the Central Bank.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).