History of Philippine money

The Philippine peso is derived from the Spanish peso or pieces of eight brought over in large quantities from Spanish America by the Manila galleons of the period from the 16th century to the 19th. From the same Spanish peso or dollar are derived the various pesos of Spanish America, the dollars of the US and Hong Kong, as well as the Chinese yuan and the Japanese yen.

Pre-colonial coinage

Pre-colonial trade between tribes of what is now the Philippines and with traders from the neighboring islands was conducted through barter. The inconvenience of barter, however, later led to the use of some objects as a medium of exchange. Gold, which was plentiful in many parts of the islands, invariably found its way into these objects that included the Piloncitos, small bead-like gold bits considered by the local numismatists as the earliest coin of the ancient peoples of the Philippines, and gold barter rings.

Spanish colonial period

The Spanish dollar, or silver peso, was first introduced by the Magellan expedition of 1521. The local salapi continued under Spanish rule as a toston or half-peso coin. The earliest silver coins brought in by the Manila galleons from Mexico and other Spanish American colonies were in the form of roughly-cut cobs or macuquinas. The first paper money circulated in the Philippines was the Philippine peso fuerte issued in 1851 by the country’s first bank, the El Banco Español Filipino de Isabel II.

American Colonial Period

After the United States took control of the Philippines, the United States Congress passed the Philippine Coinage Act of 1903. The act provided for the coinage and issuance of Philippine silver pesos substantially of the weight and fineness as the Mexican peso, which should be of the value of 50 cents gold and redeemable in gold at the insular treasury, and which was intended to be the sole circulating medium among the people. It also provided for the creation of a gold-standard fund to maintain the parity of the coins so authorized to be issued and authorized the insular government to issue temporary certificates of indebtedness bearing interest at a rate not to exceed 4 percent per annum.

Commonwealth Period

When the Philippines became a U.S. Commonwealth in 1935, the coat of arms of the Philippine Commonwealth was adopted and replaced the arms of the U.S. Territories on the reverse of coins while the obverse remained unchanged. This seal is composed of a much smaller eagle with its wings pointed up, perched over a shield with peaked corners, above a scroll reading “Commonwealth of the Philippines”. Positive political and economic developments in the 1990s paved the way for further economic liberalization and an opportunity to unburden the central bank of objectives that are inconsistent with keeping inflation stable. The New Central Bank Act (Republic Act No 7653) of June 14, 1993 replaces the old CBP with a new Bangko Sentral ng Pilipinas mandated explicitly to maintain price stability, and enjoying fiscal and administrative autonomy to insulate it from government interference.