The rising prices without commensurate salary adjustments may invite one to commit peculation. Sometimes, he board sleeps on its responsibility of reviewing the salary policies and other promotional criteria. This laxity in management could lead to bank employees’ misdemeanor.

It normally means to taking of funds that belongs to depositors and customers. On the other hand, defalcation refers to misappropriation of funds which belong to stockholders such as interest income, fees and commissions, or through the use of fictitious notes, or fraudulent expense vouchers.

by formulating and implementing monetary policy aimed at influencing money supply, consistent with its primary objective to maintain price stability.

Bank examine ____________ at anytime during banking hours

Although BA’s, as they are known, have their origin in trade bills issued by merchants, today they are an important money market instrument. It is a time draft and accepted by a bank. Before acceptance, the draft is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the bearer of the draft, it is not an obligation of the bank. Upon acceptance, which occurs when an authorized bank employee stamps the draft “accepted” and signs it, the draft becomes a primary and unconditional liability of the bank. If the bank is well known and enjoys a good reputation, the accepted draft may be readily sold in an active market.

When the note is secured, it is called a _________________.

Keeping up with neighbors and thus spending well beyond one’s income could also lead to embezzlement. Sometimes income is spent even before it is earned.

"The only divergence of the note from the real money is the fact that the note represents private bank credit rather than the state’s credit."

"The bank examination and supervision is done INTERNALLY and EXTERNALLY"

by maintaining sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso,

There are many ways of committing __________. Bank officers and employees are not free from temptation to commit crimes against morality. For example, a person who is honest could through laxity of supervision, become totally dishonest.

It is an order of one person/bank (drawer) to another person/bank (drawee) to pay a third person (payee) a sum certain in money or demand or at some specified future time. A bill of exchange is also in the form of a check or a draft.

It contains the bank’s promise to pay a draft that is presented to it for acceptance. To constitute the bank’s intention of honouring the instrument, the word “ACCEPTED” is stamped on the face of the draft and it is duly signed by the bank’s representative. The date of acceptance is also clearly indicated.

Main functions of the Bangko Sentral are:

It is also a promise of a bank to honor drafts drawn against it or for its account. By virtue of the letter of credit, a bank substitutes its credit for that of the accredited buyer and promises to pay the beneficiary or his representative upon presentation of a draft, subject to the conditions in the letter of credit.

Other Types Of Checks:

These are short-term securities issued by the country’s Treasury. This will reduce a bank’s ability to lend to its clients leading to a contraction of the money supply. The bill consists of an obligation to pay the bearer the face of value of the bill upon a given date. A bank buying such a bill will not pay face value for its but would instead but it at a discount. The bill is tradable so the purchaser does not have to hold it until the due date. If interest rates decrease during the term of the bill, the holder can sell the bill at a profit before the due date.

Money Market Instruments:

It is also an order to pay and is a bill of exchange. Drafts are classified as sight or demand, time, commercial, or bank drafts. Such instruments which are paid at sight upon presentation are known as demand drafts.

"The bank notes are practically like money."

The determination or making of the price of shares and the price of money / debt (the rate of interest).

(NBPS)

In the Philippines, the Supervision and Examination Sector of the Banko Sentral is charged with the responsibility of conducting spot and regular checks on all banking institutions. It is, therefore, a vital arm of the Bangko Sentral. It is headed by a Deputy Governor and staffed by examiners and other administrative personnel.

NOW is an acronym that stands for ______________

It comes from agencies of the government and is not in any way connected with the bank management.

These are performed by persons within bank’s management.

The most effective prevention against peculation is the ____________

Many men have been ruined because of __________. At first it is simply a “recreation,” then it becomes a “habit” and finally a “status symbol” that must be maintained. The die-hard gambler looks for easy money. What better chance than to “borrow” from his bank’s vault small amounts replaced by ”I.O.S’s” in progression? Then the “leak in the dyke” suddenly becomes a flood.

RUBBER OR BOUNCING CHECK is one which is returned for insufficiency of funds. CROSSED CHECK would be one which is intended only for deposit. CERTIFIED CHECK is one which is confirmed to have existing funds.

The Basic Nature of Central Banking:

It is the order of a depositor to his bank to pay a third person of himself a sum certain in money on demand. Such is commonly known as a PERSONAL CHECK. When the bank’s cashier is the drawer of the check, it is known as the CASHIER’S CHECK. When the manager of a business is the drawer, it is termed a MANAGER’S CHECK.

The institutional arrangements and conventions that exist for the issue and trading (dealing) of the financial instruments.

by supervising banks and exercising regulatory powers over nonbank institutions performing quasi-banking functions.

Officers may look down their subordinates and even go to the extent of emphasizing this cleavage between them in public places. Human dignity and pride which is hurt could lead a man to even up the score perhaps to spite.

Even the Christian doctrine condemns these capital sins. A man working in a bank consumed by pride and envy will do most everything to get even. Perhaps he broods and cooks up the idea of crime because someone gets to the top before he ever does.

It is an integral part of the financial system, and a significant part of the investment environment in terms of new financial instrument (debt) creation, inflation and interest rates.

It means the exhibiting of the instrument at the bank either for payment or for acceptance. The check should be presented for payment within a reasonable period of time after its issue according to the Negotiable Instruments Law. A draft, on the other hand, may be presented for payment after its last negotiation within a reasonable period.

there are two parties – the maker who makes the promise and the payee who is to receive payment.

It means the transfer of the instrument from one person to another either by endorsement and delivery. By mere delivery or by assignment. Such transfer will depend on the tenor of the instrument, particulary to whom it is made payable, or to what extent is the interest of the transferee.

It means that the check is refused payment or a time draft is refused acceptance. The refusal, therefore, mat be termed dishonour by non-payment or non-acceptance. If this happens, the holder of the instrument may file a protest in writing or orally. The law prescribes the way a protest is made. However, the protest may also be waived.

by determining the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy, and

financial advisor and official depository of the Government, its political subdivisions and instrumentalities and GOCCs.

It is an unconditional promise of a BANK to pay a sum certain in money on demand. Such note is used as a substitute for money. Years ago, the Philippine National Bank and the Bank of the Philippine Islands issued bank notes.

It is anything that is generally accepted as a means of payment.

CAUSES OF PECULATION

In the development of an effective audit and control system, all operations and all bank personnel should be covered. To know the cure, one must know the cause. Hence, a definition of terms comes on handy for this purpose.

there are three parties – the drawer, the drawee, and the payee

A person committing anyone of these peculations is dubbed a ___________.

It is the process / mechanism through which market participants attempt to find what economists call an equilibrium price. It is the price at which the market clears / deals, and can therefore also be called the market-clearing price.

It is an unconditional promise of the MAKER to pay a sum certain in money to order or to bearer on demand or at a future determinable time. When the note is secured, it is called a COLLATERAL PROMISSORY NOTE.

It is written undertaking wherein the bank agrees to make stipulated payments on your behalf should you fail to fulfil or carry out specified terms of a contract. Guarantees may also be issued in respect of the purchase of fixed property and against cash cover. The bank’s liability is restricted to the payment of a sum of money and under no circumstances accepts responsibility for the completion of the customer’s contract.

A committee on examination and supervision is usually created to effect ___________. Hence, the members of such committee become quite intimate with going-on in the bank and are ready offer suggestions or institute measures to correct any misdemeanor.

Short-term ____________ is a debt instrument commonly issued by corporation to fund a temporary capital requirement. This form of corporate borrowing usually matures within one year. Commercial paper is guaranteed by the company that incurs the obligation.

by extending discounts, loans and advances to banking institutions for liquidity purposes.

It is the process of discovering / determining the price of a security in the market place (order-driven or quote-driven market; OTC or exchange) through the bids and offers of buyers and sellers, based on a body of information at their disposal at that time.

It forms part of a negotiation of an instrument. It is simply indicated by the signature of the endorser at the back of the instrument or on some paper attached thereto. If such is the case, it is termed blank endorsement.

It confirms that the assets and liabilities are results of normal business transactions, aside from the fact, they exist as recorded.

It would mean all kinds of embezzlement, defalcation, or misappropriation of funds. Hence, a person committing anyone of these is dubbed a “peculator.”

___________ earn interest and account holders can write as many NOW checks as they want on the account. It has a feature of a savings deposit as it earns interest. It is also like a current/checking account as it offers depositors the convenience of issuing checks for payments. There is no need for a passbook in depositing or withdrawing. Not all banks, however, have NOW accounts.

The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts.

It refers to the review and analysis of the assets and liabilities of a bank to determine their existence, values and true ownership, and to ascertain that everything in regard to said assets and liabilities is in order. Audit confirms that the assets and liabilities are results of normal business transactions, aside from the fact, they exist as recorded.

Two components of money

NCD’s are like fixed deposits except they are bearer documents. They offer a market related rate of interest and are completely liquid because they can be negotiated during the term of the deposit. Most NCD’s have a term of less than one year. They usually offer a rate of return slightly higher than banker’s acceptances which makes them extremely popular instruments.