Congress, by an act passed July 1, 1902, vested general authority over the coinage in the Philippine government, but the commission decided not to take action until more specific authority could be obtained from Congress, as the proposed reform was radical, and it was very important that the new currency should at the outset command the confidence so essential to its success.
After long discussion, Congress authorized, by an act passed March 2, 1903, a new currency system based on a theoretical peso of 12.9 grains of gold 900 fine, equivalent to one-half of a United States gold dollar.

The circulating medium was to be the Philippine silver peso, which was to be legal tender for all debts, public and private, and its value was to be maintained on a parity with the theoretical gold peso.

For this purpose the creation of a gold standard, or gold reserve fund, was provided for, and this fund was to be maintained and could be used for no other purpose.
Considerable difficulty was experienced in introducing the new currency into the islands.

The banks at first failed to give any assistance to the government.

The business men of Manila, and especially the Chinese, discounted the new Philippine peso, because it did not contain as much silver as did the Mexican dollar.