With the economy performing very well, the upcoming anniversary of the Bangko Sentral ng Pilipinas (BSP) on July 3 will definitely be sweeter. It is a great feat for one of the youngest monetary authorities in the world.
Established in 1993, the BSP (www.bsp.gov.ph) replaced the old "Central Bank of the Philippines," which was founded in 1949. It was created by virtue of the Philippine Constitution of 1987 and the New Central Bank Act, which gave the bank fiscal and administrative autonomy from the Philippine government.
The BSP is just one of the 186 central banks around the world. The banks differ in name - some are called "reserve bank," "monetary authority," or "national bank." They, however, share common tasks such as setting monetary policy, issuing of national currency, acting as the bank of bankers, supervising and regulating banks, and lending to ailing banks. All of them also serve as the banks of their respective governments.
The central banks also manage their nation's foreign exchange reserves. These are deposits in foreign currencies that can be used to deal, trade, or make payments internationally. For example, Asian countries have deposits which are in US dollars or Euro.
According to the International Monetary Fund, the combined foreign exchange reserves of the world's central banks are now worth $11 trillion.
Central banks have existed a very long time. In fact, the BSP is 325 years younger than the oldest operating central bank in the world - the Bank of Sweden (www.riksbank.com), which started in 1668. The Bank of Amsterdam in the Netherlands, founded in 1609, actually preceded the "Riksbank," but it closed for good in 1819.
United Kingdom's Bank of England (BOE), however, is the one widely considered as the pioneer of the modern central banking system. Journalist Jason Rodrigues gave a brief history of the BOE (www.bankofengland.co.uk) in his 2009 article for the British newspaper The Guardian.
He said the Bank emerged in 1694 to serve as the government's banker and debt-manager. Eventually, it became a "lender of last resort" to smaller banks and the issuer of the country's national currency. Both are now common functions of central banks today, including BSP. …