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Chapter 3 Notes

Chapter 3 discusses the payments system, which includes instruments and procedures that facilitate efficient transactions in the economy. It outlines the structure, including the roles of the Central Bank, commercial banks, and non-bank financial institutions, as well as the development of electronic payment systems like InstaPay and PESONet. The chapter highlights the benefits of e-payments, such as convenience, speed, and improved financial inclusion.

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67 views2 pages

Chapter 3 Notes

Chapter 3 discusses the payments system, which includes instruments and procedures that facilitate efficient transactions in the economy. It outlines the structure, including the roles of the Central Bank, commercial banks, and non-bank financial institutions, as well as the development of electronic payment systems like InstaPay and PESONet. The chapter highlights the benefits of e-payments, such as convenience, speed, and improved financial inclusion.

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VI Tomon
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FINANCIAL MARKETS AND INSTITUTIONS Chapter 3: The Payments

System

📄 Expected Learning Outcomes:


1. Understand the nature and functions of the payments system
2. Know the structure and components of the payments system
3. Appreciate the development of the electronic payment system

📝 Summary Notes:
✅ Nature and Functions of the Payments System:
The payments system is the set of instruments, banking procedures, and
interbank funds transfer systems that ensure circulation of money in the
economy. It ensures that transactions between buyers and sellers are settled
efficiently.
Key Functions: - Facilitates exchange of goods and services - Enables
transfer of money between economic agents - Provides clearing and
settlement services - Enhances economic stability
🏦 Structure and Components of the Payments System:
1. Central Bank (Bangko Sentral ng Pilipinas - BSP):
o Oversees and regulates the system
o Ensures safety, efficiency, and accessibility
2. Commercial Banks:
o Serve as intermediaries for fund transfers and check clearing
3. Non-bank Financial Institutions:
o Includes pawnshops, remittance centers, and cooperatives
involved in fund transfers
4. Clearing and Settlement Systems:
o Examples: Philippine Payments and Settlements System
(PhilPaSS)
o Provide real-time gross settlement (RTGS)

💾 Development of the Electronic Payment System:


Electronic payments have evolved to support a more cash-lite economy. BSP
has launched initiatives such as: - InstaPay: real-time fund transfer below
PHP 50,000 - PESONet: batch-based credit payment for larger values - QR
Ph: national QR code standard
Benefits of E-Payments: - Convenience and speed - Enhanced
transparency - Improved financial inclusion

✅ Quiz (Fill in the Blanks):


1. The payments system allows the __________ of funds between buyers
and sellers. → transfer
2. BSP stands for __________. → Bangko Sentral ng Pilipinas
3. __________ is a batch-based e-payment system for high-value transfers.
→ PESONet
4. __________ is a real-time low-value fund transfer system. → InstaPay

🧠 Flashcards:
 Q: What is the payments system? A: A system that enables the
transfer of money between parties in the economy.

 Q: Name two components of the payments system. A: BSP and


commercial banks.

 Q: What is the function of PhilPaSS? A: It facilitates real-time


settlement of large-value payments.

 Q: What is the difference between InstaPay and PESONet? A: InstaPay


is for real-time, low-value transactions; PESONet is for batch-based,
high-value payments.

 Q: Give one benefit of electronic payments. A: Faster, more secure


transactions and reduced reliance on cash.

End of Chapter 3 Notes.

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