Philippine Paper Money

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 ( ₱ ). Other ways of writing the Philippine Peso sign are "PHP", "PhP", "P", or " P " (strike-through uppercase P), which is still the most common method as the Unicode Peso sign is not yet known to be supported by major and/or cross-platform fonts.

The coins are minted at the Security Plant Complex. Banknotes, passports, seaman's identification record books, land titles, checks, sweepstakes tickets, 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

Main article: Philippine 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 ⁶ ⁄ ₇ 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. A similar state of affairs existed in both Japan and Mexico. The 50 cents Peso continued in both Mexico and the Philippines right up until the 1960s.

Shortly after the introduction of the 50 cent (US) Peso, a problem occurred which was paralled in the Straits Settlements. The price of silver rose so high that the Philippine Peso coins, and the new Straits dollar coins became less valuable than their actual silver content. There was a danger in both cases that these coins would be melted down for their silver. In both cases, in 1907, new smaller coins were introduced with their silver values reduced to a safer level.

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 José 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 to September 1945, 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 ₱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) totaled about 569.2 billion pesos (about US$11.5 billion). As of October 15, 2008, the PHP is traded at 47.650 per US-Dollar.

Coins

Main article: Coins of the Philippine peso

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.

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