March M3 surges 34.8% to P7T


SUSTAINED demand for credit drove up the country’s money supply to P7 trillion, as of end-March, expanding by 34.8 percent compared with a year ago, data from the central bank showed on Wednesday.

Compared with the revised 36.1 percent rise recorded in February, however, growth in domestic liquidity (M3) in March was slightly slower, the Bangko Sentral ng Pilipinas (BSP) said.

Domestic liquidity is the amount of cash and cash-equivalent securities circulating within the economy.

Month-on-month, seasonally adjusted M3 grew by 1.3 percent following the revised 0.5-percent growth recorded in the previous month.

“As in previous months, the strong M3 growth reading in March continues to reflect the broad decline in the SDA (special deposit account) placements of trust entities compared to their levels a year ago, in line with the BSP’s operational adjustments in the SDA facility,” the BSP said.

SDAs are monetary facility instruments under the BSP that was made available to banks to manage excess liquidity in the financial system..

The central bank said that the growth in domestic liquidity remains consistent with the current pace of expansion in the real sector.

“Going forward, the BSP will continue to assess liquidity conditions closely as it guards against potential risks to price and financial stability that could arise from strong liquidity growth,” it added.

The BSP has indicated a bias toward policy tightening by raising the reserve requirement ratio for commercial banks by 1 percentage point to 19 percent effective from April 4.

On the other hand, BSP data said that domestic claims rose by 12.4 percent in March as bank lending accelerated further, while public sector credit grew at a slower pace of 3.5 percent as the deposits of the national government increased.

Net foreign assets (NFAs), or the net position of the BSP with regard to its transactions with non-residents, in peso terms also increased by 9.6 percent.

The central bank said its NFA position rose on the back of continued robust foreign exchange inflows coming mostly as overseas Filipino remittances and business process outsourcing receipts.

Similarly, the NFA of banks also increased as banks’ foreign assets expanded at a faster pace relative to the growth in their foreign liabilities, the BSP said.

“Banks’ foreign assets expanded due mainly to the growth in foreign loans and receivables as well as in their investments in marketable securities,” it added.


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