The Philippine peso, also referred to by its Filipino name piso (Philippine English: /ˈpɛsoʊ/, /ˈpiː-/, plural pesos; Filipino: piso locally [ˈpiso, pɪˈso]; sign: ₱; code: PHP), is the official currency of the Philippines. It is subdivided into 100 centavos or sentimos in Filipino.
The Philippine peso sign is denoted by the symbol “₱”, introduced under American rule in place of the original peso sign “$” used throughout Spanish America. Alternative symbols used are “PHP”, “PhP”, “Php”, or just “P”.
The monetary policy of the Philippines is conducted by the Bangko Sentral ng Pilipinas (BSP), established on 3 July 1993 as its central bank. It produces the country’s banknotes and coins at its Security Plant Complex, which is set to move to the New Clark City in Capas, Tarlac.
The Philippine peso is derived from the Spanish peso or pieces of eight brought over in large quantities from Spanish America by the Manila galleons of the 16th to 19th centuries. From the same Spanish peso or dollar is derived the various pesos of Spanish America, the dollars of the US and Hong Kong, as well as the Chinese yuan and the Japanese yen.   
Piloncitos, a type of coin used by the pre-colonial peoples of the archipelago
Piloncitos, a type of coin used by the pre-colonial peoples of the archipelago.
The trade the pre-colonial tribes of what is now the Philippines did among themselves with its many types of pre-Hispanic kingdoms (kedatuans, rajahnates, wangdoms, lakanates and sultanates) and with traders from the neighboring islands was conducted through barter. The inconvenience of barter however later led to the use of some objects as a medium of exchange. Gold, which was plentiful in many parts of the islands, invariably found its way into these objects that included the Piloncitos, small bead-like gold bits considered by the local numismatists as the earliest coin of the ancient peoples of the Philippines, and gold barter rings. The original silver currency unit was the rupya or rupiah, brought over by trade with India and Indonesia.
Two native Tagalog words for money which survive today in Filipino were salapi and possibly pera. Salapi is thought to be from isa (one) + rupya which would become lapia when adapted to Tagalog. Alternately, it could be from Arabic asrafi (a gold coin, see Persian ashrafi) or sarf (money, money exchange). Pera is thought to be from Malay perak (silver), which also has a direct cognate or adaptation in Tagalog/Filipino as pilak.
Spanish colonial period
Silver columnario peso imported from Spanish America from 1726–1770.
Spanish gold onza or 8 escudos coin imported from Spanish America and valued at 16 silver pesos.
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. The local salapi continued under Spanish rule as a toston or half-peso coin. Additionally, Spanish gold onzas or eight-escudo coins were also introduced with identical weight to the Spanish dollar but valued at 16 silver pesos.
The earliest silver coins brought in by the galleons from Mexico and other Spanish American colonies were in the form of roughly-cut cobs or macuquinas. These coins usually bore a cross on one side and the Spanish royal coat-of-arms on the other. These crudely-made coins were subsequently replaced by machine-minted coins called Columnarios (pillar dollars) or “dos mundos (two worlds)” in 1732 containing 27.07 grams of 0.917 fine silver (revised to 0.903 fine in 1771).
Fractional currency was supplied by cutting the Spanish dollar coin, most commonly into eight wedges each worth one Spanish real. Locally produced crude copper or bronze coins called cuartos or barrillas (hence the Tagalog/Filipino words cuarta or kwarta, “money” and barya “coin” or “loose change”) were also struck in the Philippines by order of the Spanish government, with 20 cuartos being equal to one real (hence, 160 cuartos to a peso). 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. Money came in different coinages, and fractional currency in addition to the real and the cuarto also existed. Money has nearly always been scarce in Manila, and when it was abundant it was shipped to the provinces. An 1857 decree requiring the keeping of accounts in pesos and centimos (worth 1/100th of a peso) was of little help to the situation given the existence of copper cuartos worth 160 to a peso.
19th century Gold/Silver Bimetallic standard
Silver 50-centimo coin issued 1864 until the 1890s.
The Spanish gold onza (or 8-escudo coin) was of identical weight to the Spanish dollar but was officially valued at 16 silver pesos, thus putting the peso on a bimetallic standard with a gold/silver ratio of 16. Its divergence with the value of gold in international trade featured prominently in the continued monetary crises of the 19th century. In the 1850s the low price of gold in the international markets triggered the outflow of silver coins. In 1875 the adoption of the gold standard in Europe triggered a rise in the international price of gold and the replacement of gold coins with silver pesos. While the Philippines stayed officially bimetallic until 1898 with the peso worth either one silver Mexican peso (weighing 27.07 grams 0.903 fine, or 0.786 troy ounce XAG) or 1/16th the gold onza (weighing 1.6915 gram 0.875 fine, or 0.0476 troy ounce XAU), in reality the gold peso has increased in value to approx. two silver pesos.
Concurrent with these events is the establishment of the Casa de Moneda de Manila in the Philippines in 1857, the mintage starting 1861 of gold 1, 2 and 4 peso coins according to Spanish standards (the 4-peso coin being 6.766 grams of 0.875 gold), and the mintage starting 1864 of fractional 50, 20 and 10 centimo silver coins also according to Spanish standards (with 100 centimos containing 25.96 grams of 0.900 silver; later lowered to 0.835 silver in 1881).
In 1897 Spain introduced 1-peso silver coins with the bust of King Alfonso XIII, as well as 5- and 10-centimos de peseta coins for circulation in the Philippines as 1- and 2-centimos de peso. The Spanish-Filipino peso remained in circulation and were legal tender in the islands until 1904, when the American authorities demonetized them in favor of the new US-Philippine peso.
The first paper money circulated in the Philippines was the Philippine peso fuerte issued in 1851 by the country’s first bank, the El Banco Español Filipino de Isabel II. Convertible to either silver pesos or gold onzas, its volume of 1,800,000 pesos was small relative to about 40,000,000 silver pesos in circulation at the end 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. A less outlandish Spanish origin, if the term is indeed derived from Spanish, could be the Spanish coins of 10- and 5-centimos de peseta (valued locally at 2- and 1-centimos de peso) which were nicknamed perra gorda and perra chica, where the “bitch” or female dog is a sarcastic reference to the Spanish lion. Arguments against either theory are that the coins bearing the face of Isabel II were nicknamed Isabelinas and that the perra coins were only introduced to the Philippines in 1897.
Asserting its independence after the Philippine Declaration of Independence on June 12, 1898, the República Filipina (Philippine Republic) under General Emilio Aguinaldo issued its own coins and paper currency backed by the country’s natural resources. The coins were the first to use the name centavo for the subdivision of the peso. The island of Panay also issued revolutionary coinage. After Aguinaldo’s capture by American forces in Palanan, Isabela on March 23, 1901, the revolutionary peso ceased to exist.