So, we have given a final activity for our subject Basic Finance. Our professor have some instructions and told us to explain it in our own words and understanding.

Since I am confident with my answers, though I am not sure if it's 100% correct, I still like to share it here. Not to brag my answers, but to just simply share it. (Bonus nalang ang reward na makukuha). So let me start sharing my answers.

Question #1: Discuss the meaning of financial system. What is its importance in the nation?

Financial system is the financial market, the participants, instruments, and securities that trades in the said markets. It is important because this is where the nation’s financially related actions take place. Also, this is where the medium of exchange happens.

Question #2: Discuss the role of each participant in the financial system.

Every participant in the financial system has their role. Household or consumers are the participants who receives salaries and wages which they spend by buying essentials. Financial institutions were behind the savings, investments, and other institutions that gives greater opportunities to the household. While non-financial firm works in the manufacturing, production, trading, construction, etc. The government also belongs to the participant because they are the leader of the community and nation. Also, there are participants which adds more opportunities and belongs to the financial system too. They also have their own businesses and governments but still other participant in other nations could get through them. These participants are also known as the Foreign participants.

Question #3: What is BSP? What is its role in the well-being of the Philippines?

Bangko Sentral ng Pilipinas is the central bank of the Philippines. It is where financial transactions take place. It controls everything in the sector of banking and finance in the Philippines.

Question #4: How is BSP structured relative to the financial system? Discuss.

Since BSP is a central bank, it is part of the financial system. They are under the participants The Central Bank and also part of it belongs to Financial Institutions. They are a 100% related to the financial system because of the role and purpose it gives to the nation.

Question #5: What is monetary policy? What is its importance in the economy?

Monetary policy is the action of the nation or country’s central bank to control the financial transactions and monitor it. Also, this policy aims to achieve its objective in the macroeconomics which could be a factor that will help the nation’s economy to grow. It is important in the economy because with this policy, the transactions and other actions being done that concerns finance will be under control and monitored as well. In this case, the economy will be easily understood.

Question #6: Discuss the relationship between monetary policy and financial system.

There is a relationship between monetary policy and financial system. Monetary policy is an action taken by the nation’s central bank in order to make financial transactions under control and monitored. In the financial system, the central bank is one of the participants, meaning to say they are absolutely connected to each other.

Question #7: What are the different tools of monetary policy? Discuss how the tools of monetary policy influence money supply and interest rates.

There are six tools of monetary policy which are Open Market Operations, Reserve Requirements on Banks, Discount Rate, Interest Rate, Credit Control, and Money Supply. These tools have different roles too that affects the money supply and interest rates. When we say open market operations, these are the operations that processes transactions between buyers and sellers. This is where the medium of exchange happens that will eventually affect the money supply. While the reserve requirements on banks means there are things to consider when you are dealing with bank transactions. In the discount rate and interest rate, the money supply changes because when we say that there is a discount rate, the money supply will decrease while when there is an interest rate, the money supply will increase.

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References for images used:

https://pixabay.com/photos/analytics-graph-chart-data-3291738/

https://pixabay.com/illustrations/audit-report-verification-magnifier-3737447/

https://pixabay.com/illustrations/report-expenses-management-3050965/

https://pixabay.com/illustrations/audit-report-verification-magnifier-4576720/

https://pixabay.com/illustrations/time-money-clock-coin-hand-4559218/

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