Question

In what ways is the BSP and Fed similar? And in what ways they significantly different?

Answer 1

Bangko Sentral Phillipines (BSP) and Federal Reserve are similar because -

A. They both are Central banks of a country where as Federal Reserve is central bank of United States where as BSP is central bank of Philippines.

B. There is an element of high growth in both the economy and they both have stimulated the growth by cutting of interest rate and adopting easy policies in last few months.

C.they both operates through monetary policy and they both are operating through cutting of the interest rates and maintaining of the required reserve ratio.

Difference between Fed and BSP are as follows-

A.Philippines is a developing nation whereas United States is a developed nation so there is a difference in approach of the management of the economy

B. Central Bank of Philippines will always be intervening in the foreign exchange markets because the exchange rate of domestic currency is prone to high fluctuations whereas United States dollar are used as the primary currency across the globe.