Money& Monetary Policy Defined (Philippine Setting)

Cmrmiranda PowerPoint Presentation
November2011 Macro Economics

Money can be defined as an object that is readily
accepted from anybody as full payment for purchase of a
certain commodity or for service rendered by an individual.
This may take the form of metal coins, paper money issued by
the government, banks or personal checks.


Barter System- the direct exchange of goods for goods, services for
services, goods for services and services for goods. It is the earliest
system of trading.

With the passage of time, the
barter system presented difficulties which
tended to slow down exchange. This lead
to the use of one object as a medium of
exchange for other goods came into use.
This system can be known as Money
Economy.


1. Burdensome

2. Inconvenient due to difficulty in finding goods which
one directly needs.

3. Does not have proper measure for the goods being
exchanged.

4. Indivisibility of some goods


1. Commodity Money

2. Metallic Money

3. Representative Money

4. Paper Money

5. Bank Drafts or Checks


• It must be portable. •It must have elasticity of supply.

•It must be homogenous. •It must be stable in value.

•It must be durable.

•It must be recognizable.

•It must be divisible.

•It must be malleable.

•It must possess general acceptability.

There are many uses or functions of money and these are money as a:

Medium of Exchange. The money is the medium of exchange
because it is always in the middle between the buyer and the seller.

Standard Value. This is being performed when all articles or
services are given a value in terms of a certain number of units of one
particular type of goods.

Standard for Postponed Payments.

Store of Value. It becomes a store value when an amount of it is
kept for a period of time.


The Monetary Unit
This refers to the type of money expressed by law as the
standard value and the circulating medium. It is made of a particular metal
or commodity with a fixed weight and fineness.

The System of Coinage
The government has undertaken sole responsibility for the
manufacture of metals into coins to avoid difficulties such as varied sizes
and shapes, designs, weights and counterfeiting.

Circulating Media
All matters related to the issuance, value, conversion and
control in the use of paper bills orPowerPoint Presentationare spelled out by the law
Cmrmiranda metallic coins

Monetary Reserves
Important in controlling credits. The security of the
depositors and as an instrument of control by the government in cases
of economic instability due to too much credit or to an imbalance in
foreign payments.

Local Tender Quality Money

*Legal Money Tender- a money which is declared by the law
as acceptable for payment of debts, both public and private.


Has several types namely;

Monometallism. A commodity standard based on one metal.

Bimetallism. Based on two metals which are standard money at a fixed
value in terms of one another.

Symmetalism. Based on a single metallic unit which is a mixture of
different metals legally proportioned.

Composite Commodity / Commodity Reserve Standard. Still on the
planning stage consists of an assorted list of staple commodities which will
serve as the standard unit.


The paper standard is one which does not use gold or any metal as the
basis of value. This is also called as Credit or Fiduciary Standard because it is
dependent on the people’s trust in the government.

*Flat Standard because the money circulation assumes its value by
decree of the government.

*Money Paper Standard because the government supervises the
circulation of the money to the public.


The Central Bank of the Philippines is
chiefly responsible for the implementation of
our monetary policy and is the sole authority
on money matters as embodied in the Section
2, Articles of the Amended Republic Act 265.
It regulates the circulation of money in order to
help trade and industry meet their needs. It is
the only agency which can issue money in the
Philippines and is responsible for maintaining
the stability of peso so it will always be
accepted within and outside the country as a
medium of exchange.

ESO

Monetary Policy can be defined as set of guidelines
and plans of action designed to achieve stability and
reliability of the financial system so that it automatically
responds and adjusts to the changes and dynamics of an
economy.


The primary objective of the monetary policy is to
provide financial stability that promotes growth and
development of the economy with minimal inflation.
The success indicator of monetary policy is the rate of
inflation in lower result.


Money& Monetary Policy Defined (Philippine Setting)

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