BSP’s government securities purchasing window to be made a regular facility

The Bangko Sentral ng Pilipinas (BSP) is set to reconfigure its government securities (GS) purchasing window into a regular facility from a crisis intervention measure, in line with the COVID-19 pandemic exit measures.

At a virtual briefing on Monday, BSP Governor Benjamin Diokno said the reconfiguration of the GS window will make it a standard liquidity instrument under

“While the GS window is not being closed, the BSP will scale down its daily GS purchases as it works toward shifting the GS window into a regular facility under the IRC framework,” he explained.

Diokno was referring to the interest rate corridor which seeks to improve monetary policy and help limit interest rate volatility.

The central bank started its weekly issuance of the 28-day BSP bills in September 2020 with an initial offer volume of P20 billion, amid the COVID-19 pandemic. This has been gradually increased in line with liquidity forecasts.

The share of outstanding placements in BSP Securities accounted for 35% of the total amount of system liquidity absorbed by the BSP through its liquidity management facilities as of end-May 2022.

After the central bank scales down purchases in the GS window, it will then be reconfigured to be consistent with the IRC framework officially launched in June 2016.

“Consistent with the overall monetary strategy as guided by liquidity forecasts, the GS window will be converted from being a standing facility into an active operation at the discretion of the BSP,” Diokno said Monday.

“Once the new features of the facility have been determined, the BSP will formally re-launch the GS outright transactions window as a regular liquidity facility under our IRC framework,” he continued.

In the same briefing, Diokno said the Philippine total loan portfolio stood at P10.7 trillion as of end-April 2022, marking a 9.8% annual growth.

“The growth came largely from residential real estate loans, credit card receivables, and salary-based general-purpose consumption loans. These outpaced the declines in motor vehicle loans and other consumer loans,” he said. — RSJ, GMA News