Historical Sketch

The Portuguese navigator Magellan was the first European to arrive at the Philippines in 1521. The Spanish claim was laid two decades later, and colonization began in 1564. Until the Mexican independence in 1821, the Philippines were subordinated to the Viceroyalty. In the 1870s, insurgency began which turned into the war of independence of 1896. Two years later, after Spain's defeat in the Spanish-American War, the Philippines were ceded to the United States. The revolution continued until 1902 and was finally quenched, so that the Philippines became a U.S. territory. During the Pacific War, the islands were occupied by Japan which held it until the defeat of August 1945. The U.S. rule was restored but only for a short time. In 1946, the Republic of the Philippines attained independence.

Monetary History Overview

With the establishment of the colonial rule, the Spanish monetary system was introduced, and Spanish colonial coins were imported from the Americas. In 1851, the Spanish Bank of the Philippines began operations as a commercial bank and issued paper money. In 1857, a currency law was enacted that created the 1st Philippine Peso based on the circulating silver and gold coins, mainly from Latin America. In 1861, distinct gold coins were produced, which could never assert themselves against the dominating silver coins, followed by subsidiary silver coins in 1862. In June 1864, Spain conducted a currency reform introducing the Spanish Escudo. Three years later, in October 1868, Spain adopted the bimetallic system of the Latin Monetary Union and introduced the Spanish Peseta. Both reforms were meant to be applicable in the overseas possessions, so they were proclaimed in the Philippines in 1865 and 1869, respectively. Both did not have any practical consequences since the authorities were unable to impose the change, so that in July 1874, the Peso was formally reinstituted. The Mexican silver coins were declared legal tender, just to revoke their status in 1876. But they remained dominant in the market as the Spanish coinage, with its different standard, continued to be marginal. By the mid-1880s, also the gold coins had disappeared completely. The United States colonial administration began introducing the US Dollar, which at that time valued about two Mexican / Philippine Pesos. In July 1903, a coinage act was passed that created the 2nd Philippine Peso at half a US Dollar. The constitutional act of 1902 prohibited any state money issuance beyond subsidiary coinage, so that the Spanish Bank and the newly created National Bank retained their issuance privilege until independence. The currency supervision was mandated to a currency board within the Philippine Treasury, called Gold Standard Fund, later Exchange Standard Fund, took over local money issuance on behalf of the US Treasury. In 1942, Japan conquered the Philippines and introduced the Japanese Military Yen, as it was the case for all the conquered territories. The denomination of the occupation notes was "Peso", and they were considered on par both with the pre-war Peso and the Japanese Yen, which meant a devaluation by about 53%. After the Japanese defeat in September 1945, the pre-war currency was restored. The occupation notes were declared invalid without compensation. In 1946, a provisional currency commission oversaw the exchange of the money issued by the many resistance groups that had formed during the Japanese occupation. The Central Bank of the Philippines began operations in January 1949, and post-independence banknotes and coins were issued. In the late 1960, the spelling of the denomination changed from English ("Peso", "Centavo") into Filipino ("Piso", "Sentimo"), but the formal currency name remained, also when the central bank got renamed in 1993. In the first half of the 1960s, the Peso was devalued by almost 50%, and in 1970, the exchange rate was set to float. In the early 1980s, the Piso lost another 60% of its value and stabilized afterwards until the South East Asian currency crisis of the late 1990s. Parts of the 50% depreciation could be recovered in the subsequent years, and since the mid-2000s, the Piso has remained more or less stable.

The Philippines joined the International Monetary Fund (IMF) before full independence, on 27.12.1945, as a founding member.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources