Making ordinary people understand banking

First the scammers show a potential victim a fake commercial paper, supposedly worth billions of pesos, or millions of dollars, that bears forged signatures of Bangko Sentral ng Pilipinas officials.

Then they convince the victim to invest money in the document, promising to double the money when the document matures.

“The scam proponents usually pretend to be lawyers and they give out professional-looking calling cards and present fake certificates printed on high-quality paper,” Monetary Board member Ignacio Bunye says in his new book, “Central Banking for Every Juan and Maria,” in which he tries (and succeeds, for the most part) to explain in plain language some of the most complicated concepts in the banking industry and the way the industry is regulated.

For the most part, ordinary citizens around the world are happy to know that their governments have central banks that guard the value of their money and look out for their financial well-being.

But few are given the chance to fully understand the arcane world of banking, partly because the system is complicated and indeed not easy to understand and partly because bankers want to keep it that way, with as few people as possible who understand the trade. But the recent spate of good economic developments in the Philippines has made even ordinary citizens interested in understanding what precisely makes the economy tick and how money works—certainly a better way of growing a fortune.

At the same time, however, there have been high-profile scams that have cost thousands of Filipinos to lose their hard-earned money, highlighting the need for ordinary citizens to understand finance so they can protect themselves instead of just relying on the government to shield them from financial malfeasance.

It is with this in mind that Bunye, who is also a former presidential spokesperson, wrote his book.

Don’t be fooled by the book’s grade schoolish title (and illustrations). Bunye, a member of the Bangko Sentral’s policy-making Monetary Board since 2008, uses his access to the sancto sanctorum of the country’s financial system to make its operations understandable to ordinary Filipinos.

The 165-page book is actually a compilation of Bunye’s weekly newspaper columns and it does an excellent job of teaching even citizens without college education the basics of finance.

BSP operations

Indeed, Bunye, who served as mayor of Muntinlupa City from 1988 to 1998, explains that in planning the book he had high school students, jeepney drivers and government workers in mind and that he wanted to help them better appreciate the BSP by explaining its operations to them in bite-sized pieces.

The book therefore is written specifically for people with zero to very little knowledge of banking and finance.

Available in bookstores since late last year, “Central Banking for Every Juan and Maria” is divided into 16 chapters, covering topics like the BSP’s various roles in the Philippine economy (good reference material), the operations of banks and pawnshops and money laundering.

A former outsider who was given a front-row seat to the action in the cliquish world of banking, Bunye is now reporting on his findings to the public.

“Economists and bankers may not like their work explained so simplistically (and they often disagree), but this book was written for a different audience,” writes Bunye, who served as press secretary in the administration of President Gloria Macapagal-Arroyo from 2002 to 2008.

Read to the end

And while the book isn’t exactly bedside reading material, Bunye’s writing style manages to keep readers interested enough to get to the really important parts—the ones that affect their wallets.

One such part comes near the end of the book.

“If I [can] make a suggestion, if there is one chapter I highly recommend, it would be Chapter 13,” Bunye says at the launching of the book. “[Read] Economic and Financial Education (the chapter’s title), for the very reason that it is possible for every Filipino to make sound economic and financial decisions whether or not he took up economics, whether he is a school dropout or a learned scholar.”

Knowing that the gods of finance have not always helped ordinary people make the best financial decisions (hence the proliferation of scams), Bunye pounds on the topic passionately, throwing in sections that deal with concerns of such ordinary people as overseas Filipino workers, retirees and other groups vulnerable to get-rich-quick rackets.

Financial literacy

The book contains a section on financial literacy and provides readers options and resources if they want to find other materials to learn more about banking and finance.

“We consumers have a responsibility to understand our finances—from as basic as what to do with the coins and bills in our wallet to as challenging as choosing what financial instruments to invest in,” Bunye points out.

Ultimately the book’s lesson is, the value of our money lies not with bankers or the government, but with us.