MANILA, Philippines --- For the past three weeks, we have been examining the history of banking in the Philippines. In this final article, we will focus on the development of financial and legal reforms in the country in the last two decades.
According to the Bangko Sentral ng Pilipinas' "The General Banking Law Annotated: Book 2," the financial innovations that were introduced in the Philippines can be divided into three episodes:
Banking innovations prior to the 1990s.
Institutional changes in the 1990s: classified into foreign exchange liberalization, financial liberalization, and the passage of the General Banking Law of 2000.
After the year 2000: the emergence of non-traditional banking products and services.
In 1992, the Bankers' Association of the Philippines created the Philippine Dealing System (PDS). The PDS linked bank participants through an electronic screen-based network that enabled information sharing and the undertaking of foreign exchange transactions.
The same year, the Rural Banks Act of 1992 repealed Republic Act 720, as amended. The Rural Banks Act was passed to encourage and assist in the establishment of a rural banking system that would make credit available and readily accessible in the rural areas on reasonable terms.
On July 3, 1993, pursuant to its constitutional mandate to establish an independent central monetary authority, Congress passed House Bill No. 7037 and Senate Bill No. 1235, which were later signed into law as Republic Act 7653, the New Central Bank Act.
The law created the Bangko Sentral ng Pilipinas with the primordial responsibility to administer the monetary and banking system.
The same law declared that all powers, duties and functions vested by law in the Central Bank of the Philippines that not inconsistent with the provisions of Republic Act No. …