Financial Market 

is a market or place It is where the bulk of exchange

where buyers and sellers trade trading occurs and refers to the “stock
commodities, foreign exchange, and market”. 
financial securities.
Over-the-counter traded stocks - traded
It is also called as "Wall Street" or “capital directly between dealers over the
market". telephone or by computer (online). Also
called as “Unlisted stocks”.
Finance is a term for matters regarding the
creation, study and management of 2. Money Market - to manage their
money and investments. liquidity positions through lending
Market refers to a place where potential and borrowing short-term
loans, under 1 year.
buyers and sellers get together to trade
goods and services.
One can borrow money within a quite short
TYPES OF FINANCIAL MARKETS period of time via a standard instrument, the
so-called “call money”. These are funds
1. Capital Market - raising of capital on borrowed for one day, from 12:00 PM today
a long-term basis, generally over until 12:00 PM on the next day.
1 year.
3. Commodity Market - where traders
It consists of a primary and and investors buy and sell natural
a secondary market. resources or commodities such as
corn, oil, meat, and gold.
Two main subgroups:
Hard Commodities are raw materials
Stock market - trades shares of typically mined, such as gold, oil, rubber,
ownership of public companies. iron ore etc.

 Bond market - offers opportunities Soft Commodities are typically grown

for companies and the government agricultural primary products such as
to secure money to finance a wheat, cotton, coffee, sugar etc.
project or investment. Investors
buy bonds from a company, and the 4. Derivatives market - A market
company returns the amount of the involves derivatives or
bonds within an agreed period, plus contracts whose value is based on
interest. the market value of the asset being
traded.
Primary Market - also known as “new issue
market”. Where securities are being created It facilitates the trading in financial
and traded for the first time without using instruments such as futures contracts
any intermediary.  and options used to help control
financial risk. 
 Secondary market - also known as
“aftermarket”. the place where investors FUNCTIONS OF THE MARKETS
purchase previously issued securities like 1. It puts savings into more productive
stocks, bonds, futures and options from use.
other investors.
2. It determines the price of securities.
 3. It makes financial assets liquid.  Credit unions

4. Lowers the cost of transactions.  Finance firms

IMPORTANCE OF FINANCIAL MARKETS

 Financial markets provide a place
where participants like investors and
debtors, regardless of their size, will
receive fair and proper treatment.

 They provide individuals,

companies, and government
organizations with access to capital.

 Financial markets help lower the

unemployment rate because of the
many job opportunities it offers. 
WHAT ARE FINANCIAL MARKET
(Corporate Finance, 2021)
INSTRUMENTS?
It is real or virtual document representing a
WHAT ARE FINANCIAL INSTITUTIONS? legal agreement involving any kind of
They are corporations that are responsible monetary value.
for the supply of money to the
market through the transfer of funds from 3 TYPES OF FINANCIAL INSTRUMENTS
investors to the companies in the form of
 Money market instruments
loans, deposits and investments.

It also regulates the control and supply of  Capital Market Instruments

money in the market and also protect
consumers.  Hybrid Instruments

Financial Intermediaries - move WHY IS IT IMPORTANT TO STUDY

funds from parties with excess capital to FINANCIAL MARKET? THE FOLLOWING
parties needing funds. ARE THE REASONS:
 An efficient and well-functioning
TYPES OF FINANCIAL INSTITUTIONS market is a key factor to produce
 Commercial banks – biggest type higher economic growth
of bank we have
 Financial markets, such as bond and
 Trust companies stock markets, are crucial for an
economy to grow.
 Investment banks
 It promotes greater economic
 Brokerage firms efficiency by providing efficient and
productive use for funds as it
channels funds from savers to
 Insurance companies
investors.
 Asset management funds
companies
  It has effects on personal wealth,
behavior of businesses and
consumers.

 It defines the cyclical performance of

the economy (FBS Markets Inc,
2021)

Banking – a business activity of accepting  Call loans - These loans are

and safeguarding money owned, then called back at any time.
lending out this money in order to earn a Normally, these loans are taken
profit. by bill brokers or stock
brokers.
“Banking means transacting business with a
bank; depositing or withdrawing funds or  Short term loans - These are
requesting a loan etc.” sanctioned for a period up to 1
year. (normally individuals)
FUNCTIONS OF A BANK
 Medium term loans - These are
1. Primary or Main Function - are sanctioned for the period
Accepting deposits and Lending varying between 1 and 5 years.
loans:
 Long Term Loans - These loans
ACCEPTING DEPOSITS are sanctioned for a period of
 Fixed deposits - deposits mature more than 5 years it includes:
after a considerable long period like
1 year or more than that the rate  Overdraft - The bank grants
of interest is fixed. (e.g. time overdraft facility to its reliable
deposit) and respectable depositors.
(go beyond the transactions, e.g.
 Current A/C deposit - mainly pag nag file ng bankruptcy)
maintained by business community
to facilitate frequent transaction with  Cash credit - Under this facility,
big amounts. (pwede mag transact the bank allows the borrower to
nang more than 50k) (more on withdraw cash against certain
companies) security. (e.g. credit card)

 Savings bank A/C - a kind of  Bills of Exchange - The bank

demand deposits which is generally provides funds to their customers
kept by the people for the sake of by purchasing or discounting bills
safety. of exchange.

 Recurring deposit A/C - In case of 2. Secondary Function - The banks

recurring deposit the fixed amount is also provide financial services to
deposited in a bank every month for the corporate sector and
a fixed period of time. business and society as follows:

LENDING LOANS Merchant Banking - is an

organization which underwrites
 securities for companies advises in The bank which is responsible for the
various activities.  financial and economic stability of country.
For The Philippines: Bangko Sentral ng
Leasing - It refers to the renting Pilipinas (BSP)
out of immovable property by the
bank to the businessmen. (e.g. What are the functions of Bangko Sentral
buildings) ng Pilipinas (BSP)
 It is a Government’s bank in a
Mutual funds - to mobilize the banker’s bank.
savings of the general public and  Lender of last resort
invest them in stock market and  Liquidity Management
money market.  Currency Issue – providing the
printing of the money and the
Venture Capital (VC) is financial designs
capital provided to early-stage, high-  Financial Supervision – they are
potential, high risk, growth start-up supervising anything about finances
companies.  The venture capital and it has to have the approval of
fund makes money by owning equity BSP
in the companies it invests in, which  Management of Foreign Currency
usually have a novel technology or Reserves
business.  Determination of Exchange Rate
Policy

THE MONETARY BOARD

Automated Teller Machine (ATM) - also Chairman:
known as cash point. The customers can  Felipe M. Medalla (pumipirma ng
withdraw money easily and quickly 24 hours pera natin) (Duterte ad.)
a day. Members:
 Carlos G. Dominguez III
Telebanking /Internet Banking - is a
 Benjamin Diokno (previously)
throwback when people would call into a
 Peter B. Favila
central number at their bank/financial
institution in order to get balance. (similar
MAJOR FUNCTIONS OF CHAIRMAN AND
to mobile banking where you can manage
MONETARY BOARD
your finances)
1. Issue rules and regulations
2. Direct management, operations, and
Credit cards - allow a person to buy goods administration of BSP
and services up to a certain limit without 3. Establish a human resources
immediate payment. The amount is paid management system.
to the shops, hotel, etc. by the commercial 4. Adopt an annual budget and
banks.  authorize such expenditures by
BSP.
Locker Service - lockers are provided to 5. Identify its members and other
the public in various sizes on payment of officials of BSP.
fixed rent. (e.g. to safekeep the jewelleries,
land titles, anything that has value) THE GOVERNOR – the one who
signed the paper notes (pera) and is
What is a Central Bank?
 the chief executive of BSP and as embodied in Section 2, Articles of the
required to direct and supervise the amended Republic Act 2656.
operations and internal administration of
BSP. WHAT IS THE REASON WHY BSP
CANNOT PRODUCE MORE THAN WHAT
GOVERNOR’S DUTIES AND WE NEEDED?
RESPONSIBILITIES  Because our economic system will
1. Prepares the agenda not be balanced. It will lead to
2. Executes and administers overprices and the value of the
policies and measures money will be useless.
3. Render opinion, decision, or
ruling Money - something which has value and
4. Signs contracts can be used for exchange.
5. Represents the Monetary Board
and BSP Every country has its own money and
design because it used for exchange of
ADVOCACIES OF THE BSP goods and services.
The BSP has advocated projects on poverty
alleviation, anti-money laundering and During the Galleon Trade, the main point
public financial literacy. of transactions are in forms of bullions or
goods.
INTERNATIONAL FINANCIAL BODIES
AND FOREIGN AID FEATURES OF MONEY
They put a great deal into helping, 1. It eases transactions
particularly on the development side
through foreign aid.
2. Medium of exchange
INTERNATIONAL FINANCIAL BODIES:
World Bank – an international institution o Easily standardized
that provides financial aid and technical
assistance to developing countries. o Widely accepted

International Monetary Fund – a o Divisible, so that it is easy to

specialized agency of the UN, to promote make change
international monetary cooperation.
o Easy to carry
Foreign Loan Providers – provide
development loans or credit to less o Must not be perishable
developed countries or LCDs.
3. Store of value
CRITICISMS OF FOREIGN AID:
1. Too much dependency
o transfers purchasing power
2. Too much intrusion
from the present to the future
3. Too much bureaucracy
4. Too much corruption
4. Unit of account
It is the responsibility of Bangko Sentral ng
Pilipinas to administer the monetary, o the common unit by which
banking, and credit system of the republic everyone measures prices
and values.
Philippine money (banknotes made - Palm Civet from the Cordilleras that
mainly of 80% cotton and 20% abaca.)
produce one of the best coffee varieties in
1000 PESOS POLYMER BANKNOTE the world, the Alamid coffee.
Security Features:
 Sampaguita Clear Window

 Serial Numbers 50 Peso

 Shadow Thread President Sergio Osmena, who led

 Vertical Clear Window our country during the critical stage

at the end of World War Two as

 Metallic Features
well as our transition to an
Resistance to Water, Oil, Dirt, and General
wear and tear.
independent nation.
20 PESOS NEW GENERATION
CURRENCY COIN - Taal Lake home of the world's
 Microtext (Republika ng Pilipinas)
 Year mark (2019) smallest active volcano, and the
 Mint mark (baybayin)
Maliputo fish that is unique to the
 BSP letters located in 6 angles
 Logo of BSP, Malacanan palace,
Nilad plant (back of the coin) place.
pinagmulang ng kabisera ng bansa
ang maynila
 Parte ng new generation currency
coin series 100 Peso
Manuel L. Quezon – face of the coin
- President Manuel Roxas, who
-first president of the Philippine
commonwealth prioritized the crafting of a central

-nagsulong ng paggamit ng wikang bank charter and provided the

pambansa
leadership for the reconstruction of

our country from the devastation of

20 Peso
the Second World War.
- President Manuel L. Quezon
- Mayon Volcano, the near perfect
- Banaue Rice Terraces
cone shaped and the butanding or
– declared as World Heritage Site
whale shark, the largest living fish
pieces in the world today.

200 Peso 1000 Peso

- President Diosdado Macapagal - the new 1000 peso honors our war

who started land reform and heroes, Chief Justice Jose Abad

restored the celebration in Santos, who was murdered for

Philippine independence to June refusing to cooperate with

12th. Japanese forces. Girl Scouts of the

- Chocolate Hills in Bohol and tarsier Philippines founder Josefa Llanes

Escoda, educator advocate of

500 Peso women suffrage and civic leader

- celebrates the Champions of who showed extraordinary courage

Philippine democracy, Senator by helping prisoners of war.

Benigno Aquino junior, who stood Brigadier General Vicente Lim, the

up against martial law and first Filipino West Point graduate

President Corazon Aquino, our first who directed gorilla activities even

woman president who restored from his hospital bed.

democracy after the historic and - Tubbataha Reefs Natural Park

peaceful people power revolution. declared by UNESCO as a World

- 8 kilometer Puerto Prinsesa Heritage Site in 1993 and the world

Subterranean River National Park famous South Sea Pearl.

declared in 1999 as a UNESCO World

Heritage Site and the blue-naped New 1000 Peso Bill

parrot -Polymer banknote

-Sampaguita clear window

-serial numbers History of the Philippine Peso

-shadow thread -paper currency was first used in the mid-

19th century under Spanish rule
-vertical clear window
-with the establishment of the central bank
-metallic features of the Philippines in 1949 greast filipinos
appeared on banknotes, the English series
-blue iridescent figure
-affirmed our independence
-polymer substrate
In the 1960’s, filipino series, key events and
-tactile dots place in the history appeared

-embossed prints 70’s, ang bagong lipunan stamped in the

new bills
-flying eagle
New design series was launched After the
-enhanced value panel philipines power revolution 1986 along wqiht
the 5h peso bill kung saan andun si benigno
-in correlation with the previous pandemic, aquino jr. and thousand-peso bill
polymer banknote has proven to contain
viruses for a shorter period of time unlike Bsp was created in 1993 central monetary
the existing thousand-peso bill (sanitized authority
with less risk of damage)
Money shifted from cotton linen to cotton
-lesser carbon footprint abacca

-recyclable etc. When printing the money

-lasts 2.5-5 times longer than paper Department of economic research –

banknotes determines currency demand

- resistant to water, dirt, tear, etc. Security plant complex – determines the
materials needed to produce money
- more cost-effective
When the banknotes designs are changed
- rich culture; flora and fauna the president’s approval is required

- sampaguita Special security paper is the material of

banknotes composing 80% cotton and 20%
Philippine abacca
- south sea pearl tubbataha reefs natural
park
15-20 colors
-t’nalak weave design
Intaglio printing

Bundles of 1000 pcs each

After printing delivered to currency
management groups then to banks, then
economy (our wallets)

Price stability is the reason why we can’t

just print money