Bangko Sentral rediscount loans down 75.2% amid ample money supply

Loans taken by rural and thrift banks under the Bangko Sentral ng Pilipinas (BSP) peso rediscount facility further slipped as of end-February, reflecting ample money in the banking system.

 

Banks – mostly thrift and rural institutions – took out some P70 million from the peso rediscount facility, down 75.2 percent from P282 million a year earlier, the central bank said in a statement Tuesday. 

 

"This is a sign that banks are awash with cash," Bank of the Philippine Islands lead economist Emilio Neri Jr. told GMA News Online.

 

"It's a challenge for banks to look for outlets for this liquidity," he added.

 

Of the total loan take outs during the period, the central bank said 76.1 percent went to commercial credits and 23.9 percent to other credits consisting of 13.5 percent for housing, 8.2 percent for capital expenditure and 2.2 percent for permanent working capital.

 

The rediscount window is a source of funds for banks to meet short-term liquidity needs.

 

No bank tapped the dollar window under the exporters' dollar and yen rediscount facility (EDYRF), in contrast to the $0.8 million taken in the same comparable period.

 

Also, no yen-denominated loan was disbursed during the period, the BSP said. 

 

Money supply grew by 7.7 percent to P7.5 trillion in January from a year earlier as measured by M3, latest Bangko Sentral data showed. 

 

The broadest measure of money in the financial system, M3 includes mainly currencies in circulation, bank deposits, and money market funds. 

 

The peso rediscount rate was pegged in line with the key policy rate of 4 percent, according to the central. 

 

The rate for loans under the exporters' dollar rediscount rate was 2.38685 percent a year, and 2.22071 percent under the yen rediscount facility. Both rates were based on the London Interbank Offered Rate or Libor. – VS, GMA News