MANILA, Philippines – Money supply — or the total amount of money in circulation — grew 30.1% to P6 trillion in July as banks shifted to granting credit to the private sector instead of parking their funds in high-yielding government securities.
This marked the fastest growth since December 2002, the Bangko Sentral ng Pilipinas (BSP) said in a statement Friday, September 6. July’s liquidity growth was also faster than the June’s 20%.
July was when banks’s trust units were required to reduce their special deposit account (SDA) facility placements with the BSP by at least 30%.
The pace of growth in money supply is expected to taper off after around November, which is the deadline for banks to phase their remaining SDAs.
Since these spikes in money supply growth rates are temporary, the BSP said these are “not expected to translate into significant inflationary pressures.”
More money in circulation usually means possible drivers for economic expansion. Economists, however, watch out for unhealthy growth rates since liquify can also fuel inflation.
In August, inflation averaged 2.1%, well below the 3% to 5% target for the entire year.
Awash with cash
Banks remained liquid as remittances from overseas Filipino workers (OFW) flowed steadily, as did receipts from business process outsourcing (BPO) firms and inflow from portfolio investments.
Credits extended by universal and commercial banks to the private sector grew 14.5%, up from 11.% in June.
This “reflects the sustained growth in bank lending to bolster economic activity,” the BSP stressed.
Banks’ investments in government securities pushed net claims on the government by 8.1%.
The BSP announced it has adopted international standards in calculating the latest monetary data to allow cross-country comparison. – Rappler.com
There are no comments yet. Add your comment to start the conversation.