By Lee C. Chipongian

The central bank said domestic liquidity (M3) expanded by 13.3 percent year-on-year in March to ₱13.1 trillion.

Based on Bangko Sentral ng Pilipinas (BSP) initial data as of end-March, the latest M3 statistics recorded faster growth compared to February’s 10.9 percent. The month-on-month and seasonally adjusted M3 was up by 2.4 percent.

centralbank with logo 2 - Money supply grows 13.3% to ₱13.1 trillion in March – BSP

MB file photo.

“Demand for credit remained the principal driver of money supply growth,” said the BSP in a statement Friday.

The BSP said domestic claims increased by 11.9 percent in March versus 10.3 percent in February because of the “sustained growth” in private sector credit.

The BSP normally releases bank lending growth together with M3, but during the lockdown period, M3 is announced first before bank loans.

Private sector credit are boosted by loans to key sector such as: real estate activities; financial and insurance activities; wholesale and retail trade, repair of motor vehicles; electricity, gas, steam and air conditioning supply; and information and communication.

Loans for household consumption “eased due mainly to the slower growth in credit card and motor vehicle loans during the month,” said the BSP.

In March, net claims on the central government rose by 21.6 percent compared to 18.4 percent in February due to higher National Government (NG) borrowings. As for net foreign assets, the BSP noted that in peso terms, this increased by 9.1 percent year-on-year from 9.6 percent in February.

“The BSP’s NFA position continued to expand, reflecting the increase in gross international reserves (while) the NFA of banks also increased, as growth in banks’ foreign assets rose on account of higher interbank loans and de¬posits with other banks,” said the BSP.

The central bank has provided much liquidity to the financial system to cushion the adverse impact of the pandemic and its resulting lockdown and containment measures which have a direct hit on the stalled economy. Major cities and areas in the Philippines has been on community quarantine since mid-March until today.

The BSP said they continue to monitor money supply and “credit dynamics in order to provide sup¬port amid significant disruptions to economic activity.”

“The BSP reassures the public of its commitment and readiness to deploy its full range of instruments to ensure that liquidity and credit remain adequate to support domestic demand amid the ongoing health crisis,” it said Friday.

So far, the BSP has supported liquidity and credit growth by implementing these measures: cutting the policy rate by combined 125 basis points (bps) in the first quarter; slashing reserve requirement ratios (RRR) of big banks and non-banks by 200 bps; entering into a ₱300-billion repurchase agreement with the NG and also buying government securities in the secondary market; allowing new loans to micro, small, and medium enterprises to be counted as part of banks’ compliance with RRR; and raising the single borrower’s limit for loans granted by banks and quasi-banks.

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