The monetary policy of the Philippines is conducted by the Bangko Sentral ng Pilipinas (BSP), established on January 3, 1949, as its central bank.

It produces the country's banknotes and coins at its Security Plant Complex, which is set to move to New Clark City in Capas, Tarlac.

The Spanish dollar, or silver peso (worth eight reales), was first introduced by the Magellan expedition of 1521 and brought in large quantities after the 1565 conquest of the Philippines by Miguel López de Legazpi.

[6] 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.

[6] The absence of officially minted cuartos in the 19th century was alleviated in part by counterfeit two-cuarto coins made by Igorot copper miners in the Cordilleras.

A currency system derived from coins imported from Spain, China and neighboring countries was fraught with various difficulties.

Its divergence with the value of gold in international trade featured prominently in the continued monetary crises of the 19th century.

A fanciful etymology for the term pera holds that it was inspired by the Carlist Wars where Queen Isabel II was supposedly called La Perra (The Bitch) by her detractors, and thus coins bearing the image of Isabel II were supposedly called perras, which became pera.

After Aguinaldo's capture by American forces in Palanan, Isabela on March 23, 1901, the revolutionary peso ceased to exist.

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".

In 1942, at the height of the resistance against the Japanese invasion in Corregidor island, US-Philippine forces managed to ship off to Australia most of the gold and significant assets held in reserve by Manila's banks, but they had to discard an estimated ₱ 15 million worth of silver pesos into the sea off Caballo Bay rather than surrender it to the Japanese.

After the war these assets would be returned to Philippine banks, and most of the discarded pesos would be recovered but in badly corroded condition.

Thus the currency names appearing on coinage and banknotes changed from the English centavo and peso to the Filipino sentimo and piso.

The CBP's final era from 1970 until the BSP's reestablishment in 1993 involved a "managed float system" with no more fixed parity commitments versus the dollar.

Difficulties continued throughout the 1970s and 1980s in managing inflation and keeping exchange rates stable, and this was complicated further by the CBP lacking independence in government, especially when the latter incurred fiscal shortfalls.

The market decides on the level in which the peso trades versus foreign currencies based on the BSP's ability to maintain a stable inflation rate on goods and services as well as sufficient international reserves to fund exports.

It is the most widespread preferred term over sentimo in other Philippine languages, including Abaknon,[20] Bikol,[21] Cebuano,[22][23] Cuyonon,[24] Ilocano,[25] and Waray,[20] In Chavacano, centavos are referred to as céns (also spelled séns).

In 1937, the eagle-and-shield reverse design was changed into the coat-of-arms of the Commonwealth of the Philippines while retaining the legend "United States of America".

In view of its highly successful run, President Taft then appointed a committee that reported favorably on the advantages and savings from changing the size of United States banknotes to Philippine-size.

Its first notes were Treasury Certificates printed under US administration overprinted with "Victory - Central Bank of the Philippines".

[38][39][40][41] Bangko Sentral ng Pilipinas (BSP) began the 12-year demonetization process of the New Design Series when the New Generation Currency (NGC) project was started in 2007 through formal conceptualization process which was a result of the meeting of the minds of people with diverse backgrounds and ideas: central bankers, artists, technocrats, historians, communication experts, and currency printers to further enhance security features and to improve durability.

[42][43] The members of the numismatic committee included Bangko Sentral Deputy Governor Diwa Guinigundo and Dr. Ambeth Ocampo, chairman of the National Historical Institute.

Among these are the exclusion of Batanes from the Philippine map on the reverse of all denominations, the mislocation of the Puerto Princesa Subterranean Underground River on the reverse of the 500-peso note and the Tubbataha Reef on the 1000-peso note, and the incorrect coloring on the beak and feathers of the blue-naped parrot on the 500-peso,[45][46] but these were eventually realized to be due to the color limitations of intaglio printing.

[47] The scientific names of the animals featured on the reverse sides of all banknotes were incorrectly rendered in the 2010 series, but were corrected starting 2017.

[50][51] Commemorative banknotes have been issued by the Bangko Sentral ng Pilipinas to memorialize events of historic significance to the Philippines.

Its primary monetary policy objective is to promote a low and stable inflation conducive to a balanced and sustainable economic growth.

In 2005, about 78 million 100-peso notes with President Gloria Macapagal Arroyo's surname misspelled as "Arrovo" were printed and planned to be circulated.

In 2017, a one-peso coin that was allegedly minted in 1971 was said to bear the design of the novel Noli Me Tángere by Jose Rizal on the reverse.

[62] In June 2018, a Facebook page posted a ₱10,000 note with a portrait of President Ramon Magsaysay on the front and a water buffalo and Mount Pinatubo on the back.

The Bangko Sentral ng Pilipinas did not issue this banknote and stressed that only 6 denominations were in current circulation (20, 50, 100, 200, 500 and 1,000 pesos).