BANKS did not tap the rediscount window of the Bangko Sentral ng Pilipinas for the whole month of January.

“There were no availments under the Peso Rediscount Facility and the EDYRF (Exporters Dollar and Yen Rediscount Facility) for the period covering 01 to 31 January 2020,” the BSP said in a statement on Friday.

Analysts said that the additional liquidity stemming from the reserve requirement ratio cuts in 2019 may have given flexibility to banks.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the reduction in banks’ reserve requirements last year infused more than P450 billion in liquidity into the financial system.

“Thus, more peso funds with banks due to the RRR cuts reduced the need to tap banks’ rediscounting facility with the BSP, given the banks’ greater flexibility to lend more to their clients,” Mr. Ricafort said in a text message.

This was echoed by UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“In theory, growing liquidity (financing source and money) helps financial institutions fund economic activities. Thus, additional financing from the rediscount facility is secondary at this point,” Mr. Asuncion said in a text message.

The BSP enables lenders to tap additional money supply by posting their collectibles from clients as collateral through the rediscount window.

This gives banks the chance to use fresh cash — which could be in peso, dollar, or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.

Meanwhile, for this month, rediscount rates stand at 5.1965% for peso loans maturing in 90 days or less, while those with a tenor of 91- to 180-day are priced at 6.143%.

Based on the rules set by the BSP, the yield on the peso rediscount facility is the overnight lending rate, which has been reduced to 4.25% on Thursday, to be added to a spread depending on the term of the loan.

On the other hand, dollar credit lines come with a lower rate of 4.69763% those maturing from one day to three months; 5.64413% for 91- to 180-day loans; and 7.53713% for 181- to 360-day credits.

As for yen loans, rates were placed at 2.88983% for one to 90-day loans; 3.83633% for 91- to 180-day loans; and 5.72933% for 181- to 360-day loans.

Computation for the EDYRF is based on the 90-day London Inter-Bank Offered Rate plus the spread depending on the tenor of the credits. — L.W.T. Noble