Article 137p. 137

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

CHAPTER IV Instruments of Bangko Sentral

Action

ARTICLE I General Criterion

SECTION 68. Means of Action . — In order to achieve the

primary objective of price stability, the Monetary Board

shall rely on its moral influence and the powers granted

to it under this Act for the management of monetary

aggregates.

ARTICLE II Operations in Gold and Foreign

Exchange

SECTION 69. Purchases and Sales of Gold . — The

Bangko Sentral may buy and sell gold in any form,

subject to such regulations as the Monetary Board may

issue.

The purchases and sales of gold authorized by this

section shall be made in the national currency at the

prevailing international market price as determined by

the Monetary Board.

SECTION 70. Purchases and Sales of Foreign Exchange .

— The Bangko Sentral may buy and sell foreign notes

and coins, and documents and instruments of types

customarily employed for the international transfer of

funds.

The

Bangko

Sentral

may

engage

in

future

exchange operations.

The Bangko Sentral may engage in foreign exchange

transactions with the following entities or persons only:

(a) banking institutions operating in the Philippines;

(b)

the

Government,

its

political

subdivisions

and

instrumentalities;

(c) foreign or international financial institutions;

(d) foreign governments and their instrumentalities; and

(e) other entities or persons which the Monetary Board is

hereby empowered to authorize as foreign exchange

dealers, subject to such rules and regulations as the

Monetary Board shall prescribe.

In order to maintain the convertibility of the peso, the

Bangko Sentral may, 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 Bangko Sentral shall effect its exchange transactions

between foreign currencies and the Philippine peso at

the rates determined in accordance with the provisions of

Section 74 of this Act.

SECTION 71. Foreign Asset Position of the Bangko

Sentral .

—

The

Bangko

Sentral

shall

endeavor

to

maintain at all times a net positive foreign asset position

so that its gross foreign exchange assets will always

exceed its gross foreign liabilities. In the event that the

equivalent amount in pesos of the foreign exchange

liabilities

of

the

Bangko

Sentral

exceed

twice

the

equivalent amount in pesos of the foreign exchange

assets of the bank, the Bangko Sentral shall, within sixty

(60) days from the date the limit is exceeded, submit a

report

to

the

Congress

stating

the

origin of these

liabilities, and the manner in which they will be paid.

SECTION

72.

Emergency

Restrictions

on

Exchange

Operations . — In order to achieve the primary objective

of the Bangko Sentral as set forth in Section 3 of this Act,

or

protect the international reserves of the Bangko

Sentral in the imminence of, or during an exchange crisis,

or

in

time

of national emergency and to give the

Monetary Board and the Government time in which to

take

constructive

measures

to

forestall,

combat,

or

overcome such a crisis or emergency, the Monetary

Board, with the concurrence of at least five (5) of its

members and with the approval of the President of the

Philippines, may temporarily suspend or restrict sales of

exchange by the Bangko Sentral , and may subject all

transactions in gold and foreign exchange to license by

the Bangko Sentral , and may require that any foreign

exchange thereafter obtained by any person residing or

entity

operating

in

the

Philippines

be

delivered

to

Bangko Sentral or to any bank or agent designated by

the Bangko Sentral for the purpose, at the effective

exchange rate or rates: Provided, however , That foreign

currency deposits made under Republic Act No. 6426

shall be exempt from these requirements.

SECTION 73. Acquisition of Inconvertible Currencies . —

The Bangko Sentral 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

Bangko Sentral of foreign exchange which is not freely

utilizable in the international market.

SECTION 74. Exchange Rates . — The Monetary Board

shall determine the exchange rate policy of the country.

The Monetary Board shall determine the rates at which

the Bangko Sentral shall buy and sell spot exchange, and

shall

establish

deviation

limits

from

the

effective

exchange rate or rates as it may deem proper. The

Bangko

Sentral

shall

not

collect

any

additional

commissions or charges of any sort, other than actual

telegraphic of cable costs incurred by it.

The Monetary Board shall similarly determine the rates

for other types of foreign exchange transactions by the

Bangko Sentral , including purchases and sales of foreign

notes and coins, but the margins between the effective

exchange rates 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 transactions.

SECTION 75. Operations with Foreign Entities . — The

Monetary Board may authorize the Bangko Sentral to

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 Bangko

Sentral may also act as agent or correspondent for such

entities.

Upon authority of the Monetary Board, the Bangko

Sentral may pledge any gold or other assets which it

possesses as security against loans which it receives from

foreign or international entities.

ARTICLE III Regulation of Foreign Exchange

Operations of the Banks

SECTION 76. Foreign Exchange Holdings of the Banks .

— In order that the Bangko Sentral 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 to the Bangko Sentral or to other banks 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 74 of this Act.

The

Monetary

Board,

may

whenever

warranted,

determine the net assets and net liabilities of banks and

shall, in making such a determination, take into account

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