Article 136p. 136

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CHAPTER III Guiding Principles of Monetary

Administration by the Bangko Sentral

ARTICLE I Domestic Monetary Stabilization

SECTION 61. Guiding Principle . — The Monetary Board

shall endeavor to control any expansion or contraction in

monetary

aggregates

which

is

prejudicial

to

the

attainment or maintenance of price stability.

SECTION 62. Power to Define Terms . — For purposes of

this article and of this Act, the Monetary Board shall

formulate definitions of monetary aggregates, credit and

prices and shall make public such definitions and any

changes thereof.

SECTION 63. Action When Abnormal Movements Occur

in the Monetary Aggregates, Credit, or Price Level . —

Whenever

abnormal

movements

in

the

monetary

aggregates, in credit, 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 Bangko Sentral under the provisions of this Act; and

(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 monetary

aggregates, of credit or of prices; cd

(2) the extent to which the changes in the monetary

aggregates, in credit, 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 to be adopted.

Whenever the monetary aggregates, or the level of credit,

increases or decreases by more than fifteen percent (15%),

or the cost of living index increases by more than ten

percent (10%), in relation to the level existing at the end of

the corresponding month of the preceding year, or even

though any of these quantitative guidelines have not

been reached when in its judgment the circumstances so

warrant, the Monetary Board shall submit the reports

mentioned

in

this

section,

and

shall

state

therein

whether, in the opinion of the Board, said changes in the

monetary aggregates, credit or cost of living represent a

threat to 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 and to

Congress until it considers that the monetary, credit or

price

disturbances

have

disappeared

or

have

been

adequately controlled.

ARTICLE II International Monetary Stabilization

SECTION 64. International Monetary Stabilization . —

The Bangko Sentral shall exercise its powers under this

Act to preserve the international value of the peso and to

maintain its convertibility into other freely convertible

currencies primarily for, although not necessarily limited

to, current payments for foreign trade and invisibles.

SECTION

65.

International Reserves . — In order to

maintain the international stability and convertibility of

the Philippine peso, the Bangko Sentral shall maintain

international reserves adequate to meet any foreseeable

net

demands

on

the

Bangko

Sentral

for

foreign

currencies.

In judging the adequacy of the international reserves, 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

Bangko Sentral '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.

SECTION 66. Composition of the International Reserves .

— The international reserves of the Bangko Sentral may

include but shall not be limited to the following assets:

(a) gold; and

(b) assets in foreign currencies in the form of: documents

and

instruments

customarily

employed

for

the

international

transfer

of

funds;

demand

and

time

deposits in central banks, treasuries and commercial

banks abroad; foreign government securities; and foreign

notes and coins.

The Monetary Board shall endeavor to hold the foreign

exchange resources of the Bangko Sentral 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 reserves of the Bangko

Sentral .

The Bangko Sentral shall be free to convert any of the

assets in its international reserves into other assets as

described in subsections (a) and (b) of this section.

SECTION 67. Action When the International Stability of

the Peso Is Threatened . — Whenever the international

reserve of the Bangko Sentral falls to a level which the

Monetary

Board

considers

inadequate

to

meet

the

prospective net demands on the Bangko Sentral 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 Bangko Sentral under the provisions of this Act; and

(b) submit to the President of the Philippines and to

Congress 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

monetary,

fiscal

or

administrative

measures

further 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 Bangko Sentral , 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 balanced and

sustainable growth of the economy, the Monetary Board

shall propose to the President, with appropriate notice to

Congress, such additional action as it deems necessary to

restore

equilibrium

in

the

international

balance

of

payments of the Philippines.

The Monetary Board shall submit periodic reports to the

President

and

to

Congress

until

the

threat

to

the

international monetary stability of the Philippines has

disappeared.

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