As yields of banks have gone down, the level of funds placed in the special deposit accounts (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) is also shifting, according to BSP Governor Amando Tetangco Jr.
“Yields have gone down again, that could be part of the reasons why the level of SDA have also gone down,” Tetangco said.
The SDA facility allows banks and trust entities to park unused funds with the BSP. It is a mechanism used by the central to manage excess liquidity in the market.
Data from the central bank said that funds parked at the SDA facility went down to P1.798 trillion as of June 14, from the P1.817 trillion the previous week. The recent figure was also lower compared to the P2.02 trillion in mid-April.
The decline was attributed to the new Monetary Board memorandum limiting bank’s access to the SDA facility.
The board decided that all other SDA placements of trust department/entities such as investment management accounts (IMA) shall be reduced by at least 30 percent on or before July 31, 2013. It added that any remaining balance shall be phased out by November 30, 2013.
Asked on the possible scenario on July 30 where IMAs should be withdrawn by at least 30 percent, Tetangco said that it depends on what will be converted, adding that some of the funds may go into trust which is allowed for placement to SDA.
He added that the reforms that have been implemented in SDAs are basically aimed at making sure that the facility continues to be a monetary instrument rather than an investment vehicle.
“So the level of SDA would depend on a number of things, such as the amount of liquidity that flows into the system that will have to be mopped up, to make sure that domestic liquidity doesn’t grow too fast and just move consistent with the requirements of the economy,” he said.