BANKS did not tap the rediscount facility of the Bangko Sentral ng Pilipinas (BSP) in July as policy easing measures have already boosted liquidity in the market.
“For the period covering Jan. 1 to July 31, total availments under the peso rediscount facility remains at P20.7 billion as there was no availment in July,” the central bank said in a statement on Monday.
Lenders last touched the facility in March and April for peso rediscount loans worth P20.7 billion.
This is lower compared to the P116.574 billion in loans from the facility recorded from January to July 2019.
Banks likewise left the facility untapped from November 2019 to February 2020.
The BSP’s rediscount facility allows banks to get hold of additional money supply by posting their collectibles from clients as collateral.
In turn, the banks may use the cash — in peso, dollar or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.
The halt in rediscount availments is a sign of high liquidity in the market, said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.
“We know that liquidity has been high recently with the various monetary actions of the BSP since February to address the impact of the COVID-19 pandemic. Demand for the facility may remain subdued as long as liquidity remains high in the coming months,” Mr. Asuncion said in an e-mail.
The BSP slashed the reserve requirement of universal and big banks by 200 basis points (bps) to 12% in April to provide a liquidity boost during the lockdown. The move freed up some P200 billion into the financial system.
The central bank in July also reduced the reserve requirement ratios of thrift and rural banks by 100 bps to three percent and two percent, respectively, releasing about P10 billion in liquidity.
The BSP has also allowed banks’ lending to micro-, small, and medium-sized enterprises as well as to some large enterprises hit by the pandemic to count as reserve compliance.
Meanwhile, for this month, all peso loans, regardless of maturity, will be priced at 2.75%, which is the lending rate of the BSP.
For dollar-denominated loans, applicable rates are at 2.24875% for all tenors.
Yen loans are priced at 1.94483% regardless of maturity. — Luz Wendy T. Noble