History of Philippine Banking System
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Financial System is like the heart of the human beings, if it stops working then the person is dead in the same way that if the financial system stops working, then the economy would collapse. It is inherent in every society the law of supply and demand. There will always be those who have surplus resources and others will have deficit. Financial System is crucial to the allocation of these resources.
In the Philippines settings, Financial System is composed of banking institutions and nonbank financial intermediaries, including commercial banks, specialized government banks, thrift banks and rural banks. It is also composed of offshore banking units, building and loan associations, investment and brokerage houses and finance companies. The Bangko Sentral ng Pilipinas and the Securities and Exchange Commission maintained the regulatory and supervisory control. The first credit institution in the Philippines, “The Obras Pias” was started by Father Juan Fernandez de Leon in 1754 and ended in 1820. It was in 1851 that the first Philippine Bank was established, the “Banco Espanol-Filipino de Isabela II”.
Banco Español-Filipino de Isabela II is now known as Bank of the Philippine Islands. It is the oldest standing bank in the Philippines and in the whole of Southeast Asia. It was established on August 1, 1851 and named after the mother of then Spanish King Alfonso XII. Her mother’s name was Isabella. The bank only came into being after 23 years after Spanish Monarch Ferdinand VII decreed that a public bank was to be established in the Spanish colonized country of the Philippines. The bank began its operations in 1852 and was given the honor of being the first to issue paper money. In 1906 “First Agricultural Bank of the Philippines” was established and in 1916 all of its assets and liabilities were transferred to the newly organized Philippine National Bank.