Definitions

Philippine peso

Philippine peso

The peso (Filipino: piso) (sign: ; code: PHP) is the currency of the Philippines. It is subdivided into 100 centavos (Spanish) or sentimo (Filipino). Before 1967, the language used on the banknotes and coins was English and so "peso" was the name used. The language was then changed to Pilipino (the name of the Filipino language then) and so the currency as written on the banknotes and coins is piso.

The peso is usually denoted by the symbol "". This symbol was added to the Unicode standard in version 3.2 and is assigned U+20B1 (₱). Due to the lack of font support, the symbol is often substituted with a simple "P", a P with one horizontal line instead of two (available as the peseta sign, U+20A7 (₧), in some fonts), as "PHP", or "PhP".

The coins are minted at the Security Plant Complex. Banknotes, passports, seaman's identification record books, land titles, checks, official ballots, official election returns, passbooks, postal money orders, revenue stamps, government bonds and other government documents are printed in the Security Plant Complex or the National Printing Office.

History

The Philippine peso derived from the Spanish silver coin Real de a Ocho or Spanish dollar, in wide circulation in the Americas and South-East Asia during the 17th and 18th centuries, through its use in the Spanish colonies and even in the US and Canada.

Peso fuerte

The Philippine peso was established on May 1, 1852, when the Banco Español-Filipino de Isabel II a (now the Bank of the Philippine Islands) introduced notes denominated in pesos fuertes ("strong pesos", written as "PF"). Until October 17, 1854, when a royal decree confirmed Banco Español-Filipino's by-laws, the notes were in limited circulation and were usually used for bank transactions. The peso replaced the real at a rate of 8 reales = 1 peso. Until 1886, the peso circulated alongside Mexican coins, some of which were still denominated in reales and escudos (worth 2 pesos).

Coin production commenced in 1861 and, in 1864, the Philippines decimalized, dividing the peso into 100 centimos de peso. The peso was equal to 22 grains of gold. In 1886, Philippine colonial authorities started the gradual phase-out of all Mexican coins in circulation in the Philippines, citing that Mexican coins were by then of lesser value than the coins minted in Manila.

Revolutionary period

Asserting its independence after the Philippine Declaration of Independence on June 12, 1898, the República Filipina (Philippine Republic) under General Emilio Aguinaldo issued its own coins and paper currency backed by the country’s natural resources. The coins were the first to use the name centavo for the subdivision of the peso. After Aguinaldo's capture by American forces in Palanan, Isabela on March 23, 1901, the revolutionary peso ceased to exist.

American Colonial period

After the United States took control of the Philippines, the United States Congress passed the Philippine Coinage Act (March 3, 1903), which fixed the weight and fineness of Philippine coins. The peso was defined as being equal to exactly half the gold content of the U.S. dollar. The peso was confirmed as being subdivided into 100 centavos.

Second World War

In 1942, the Japanese occupiers introduced notes for use in the Philippines. Emergency circulating notes (also termed "guerrilla pesos") were also issued by banks and local governments, using crude inks and materials, which were redeemable in silver pesos after the end of the war. The Japanese-sponsored Second Philippine Republic under Jose P. Laurel outlawed possession of guerrilla currency and declared a monopoly on the issuance of money and anyone found to possess guerrilla notes could be arrested. Because of the fiat nature of the currency, the Philippine economy felt the effects of hyperinflation.

U.S. and Philippine forces continued printing Philippine pesos, so that, from October 1944, all earlier issues except for the emergency guerrilla notes were considered illegal and were no longer legal tender.

Independence

Republic Act No. 265 created the Central Bank of the Philippines (CBP, now the Bangko Sentral ng Pilipinas) on January 3, 1949, in which was vested the power of administering the banking & credit system of the country. Under the act, all powers in the printing and mintage of Philippine currency was vested in the CBP, taking away the rights of the banks such as Bank of the Philippine Islands and the Philippine National Bank to issue currency.

In 1967, the language used on all coins and banknotes was changed to Pilipino. As a consequence, the wordings of the currency changed from centavo and peso to sentimo and piso.

In a repeat of Japanese wartime monetary policy, the government defaulted on its promises to redeem its banknotes in silver or gold coin while promising to maintain the two-to-one peso to dollar parity. This decision, compounded with the deliberate overprinting of fiat banknotes, resulted in the peso dropping in value by almost 300% against the US dollar within the first three hours of opening day. The government effort to maintain the peg devastated the gold, silver and dollar reserves of the country.

By 1964, the bullion value of the old silver pesos was worth almost twelve times their face value and were being hoarded by Filipinos rather than being surrendered to the government at face value. In desperation, then-President Diosdado Macapagal demonetized the old silver coins and floated the currency. The peso has been a floating currency ever since, which means that the currency is a physical representation of the domestic debt and whose value directly tied to people's perception of the stability of the current regime and its ability to repay the debt.

From the opening of the Bangko Sentral ng Pilipinas in 1949, successive governments have continued to devalue the currency in order to lower the accumulated domestic debt in real terms, which in December 2005 reached PHP 4.02 trillion. Many Filipinos perceive the peso's value in relation to the US dollar and tend to blame whatever regime is in power for the worsening exchange rate.

Current economy

Based on the current price of gold, the Philippine peso has now lost 99.9998% of its original 1903-1949 value. As of July 20 2008, the value of the 1903-1949 Philippine Commonwealth peso, as per definition 12.9 grains of pure gold (or 0.026875 XAU), would now cost ₱1,136.09 on the international commodity markets.

As of October 2005, the Philippine money supply (M1) totalled about 569.2 billion pesos (about US$11.5 billion).

The local stock market hit a record high in June 1 2007 while the peso is trading at around the PHP41 level to a U.S. dollar and is currently PHP41.24 as of December 14 2007, making it Asia's best performing currency so far by sharply appreciating nearly 19%. As of July 21 2008, the PHP is traded at 44.530 per US-Dollar.

Coins

In 1861, gold coins were issued for 1, 2 and 4 pesos. These were equal in gold content to the earlier Spanish coins of ½, 1 and 2 escudos. Silver coins were minted from 1864 in denominations of 10, 20 and 50 centimos de peso, with silver 1-peso coins issued in 1897. During the Revolutionary period, coins were issued in copper for 1 and 2 centavos and 2 centimos de peso.

In 1903, a new coinage was introduced. It consisted of bronze ½ and 1 centavo, cupro-nickel 5 centavos and silver 10, 20 and 50 centavos and 1 peso. The silver coins were weight related to the peso which was minted in .900 fineness and contained 374.4 grains of silver. U.S. gold coins and ½ and 1 peso coins were legal tender for any amount, with 10 and 20 centavos coins being legal tender up to 20 pesos and smaller coins up to 2 pesos. The sizes and finenesses of the silver coins were reduced in 1907, with the peso now a 20 gram coin minted in .750 silver. Production of the 1 peso coin ceased in 1912 and that of the 50 centavos in 1921.

The American Government deemed it more economical and convenient to mint silver coins in the Philippines, hence, the re-opening of the Manila Mint in 1920, which produced coins until the Commonwealth period.

In 1937, coin designs were changed to reflect the establishment of the Commonwealth. No coins were minted in the years 1942 and 1943 due to the Japanese occupation, but minting resumed in 1944, including production of 50 centavos coins. Due to the large number of coins issued between 1944 and 1947, coins were not minted again until 1958.

In 1958, a new, entirely base metal coinage was introduced, consisting of bronze 1 centavo, brass 5 centavos and nickel-brass 10, 25 and 50 centavos. In 1967, the coinage was altered to reflect the use of Filipino names for the currency units. This was the "Ang Bagong Lipunan" series. Aluminium replaced bronze and cupro-nickel replaced nickel-brass that year. 1-piso coins were introduced in 1972, followed by 5-piso coins in 1975. The Flora and Fauna series was introduced in 1983 which included 2-piso coins. The sizes of the coins were reduced in 1991, with production of 50-sentimo and 2-piso coins ceasing in 1994. The current series of coins was introduced in 1995, with 10-piso coins added in 2000.

Coins currently circulating are:

  • 5 sentimo
  • 10 sentimo
  • 25 sentimo
  • 1 piso
  • 5 piso
  • 10 piso

Denominations below 1 piso are still issued but are not in wide use.

Banknotes

In 1852, the Banco Español-Filipino de Isabel 2a issued notes for 10, 25 and 50 pesos fuertes. In 1896, the bank added 5 pesos fuertes notes. The treasury issued notes for 1, 4 and 25 pesos fuertes in 1877.

During the Spanish-American and Philippine-American wars, 1 and 5 pesos notes were issued in the name of the República Filipina.

Between 1903 and 1918, silver certificates were issued, in denominations of 2, 5, 10, 20, 50, 100 and 500 pesos. These were replaced with Treasury Certificates, issued between 1918 and 1941 in denominations of 1, 2, 5, 10, 20, 50, 100 and 500 pesos.

In 1904, the Banco Español-Filipino introduced notes in denominations of 5, 10, 25, 50, 100 and 200 pesos. In 1912, this bank changed its name to the Bank of the Philippine Islands (BPI), continuing to issue notes until 1933. The Philippine National Bank (PNB) issued notes in 1916 in denominations of 2, 5 and 10 pesos, with emergency notes issued in 1917 for 10, 20 and 50 centavos, 1, 5, 10 and 20 pesos. Between 1918 and 1937, the PNB issued notes in denominations of 1, 2, 5, 10, 20, 50 and 100 pesos. These notes were in circulation until 1947.

The Japanese issued two series of notes. The first was issued in 1942 in denominations of 1, 5, 10 and 50 centavos, 1, 5 and 10 pesos. The second, from 1943, was in denominations of 1, 5, 10, 100, 500 and 1000 pesos.

In 1944, Treasury Certificates, featuring the word "Victory" printed on the reverse, were issued to replace all the earlier notes. These were in denominations of 1, 2, 5, 10, 20, 50, 100 and 500 pesos.

In 1949, the Central Bank of the Philippines took over paper money issue. Its first notes were overprints on the Victory Treasury Certificates. These were followed in 1951 by regular issues in denominations of 5, 10, 20 and 50 centavos, 1, 2, 5, 10, 20, 50, 100, 200 and 500 pesos. The centavo notes (except for the 50-centavo note, which would be later known into the half-peso note) were discontinued in 1958 when the English Series coins were first minted.

In 1967, the CBP adopted the Filipino language on its currency, using the name Bangko Sentral ng Pilipinas, and in 1969 introduced the "Pilipino Series" of notes in denominations of 1, 5, 10, 20, 50 and 100 piso. The "Ang Bagong Lipunan Series" was introduced in 1973 and included 2-peso notes. A radical change occurred in 1985, when the CBP issued the "New Design Series" with 500-piso notes introduced in 1987, 1000-peso notes (for the first time) in 1991 and 200-piso notes in 2002.

Philippine banknotes are currently issued in the following denominations:

References

External links

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