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By Maricel E. Burgonio Reporter
THE Bangko Sentral ng Pilipinas (BSP)
will keep its special deposit account (SDA) open to government
financial institutions and bank trust departments, as it expects the
country’s money supply to continue growing by double-digit rates.
For the past few months, the
central bank has allowed the two types of financial institutions to
tap its SDA to siphon off excess liquidity that threatens to quicken
the pace of price increases.
The BSP made the announcement
days after the government said inflation rose 2.6 percent last
month, or faster than the 2.3 percent pace seen in June. The July
average price increase likewise was higher than the central bank’s
forecast of between 1.8 percent and 2.5 percent.
BSP Deputy Gov. Diwa C.
Guinigundo said the SDA is effective in trimming the growth of the
country’s money supply.
“Right now, it will stay
because it gives banks more flexible mode in placing with the BSP
rather than the reverse repurchase rate. It’s effective. We will
continue to depend on SDA,” Guinigundo told reporters.
“For July, we expect an M3
growth of close to 20 percent or close to the present growth
rate,” he added. In June, money supply growth came in at 19.4
percent, or down from 26.1 percent in April and 21.1 percent in May.
The expansion in the country’s
domestic liquidity is largely due to record inflows of dollars,
including remittances of overseas Filipino workers and foreign
investments in the local stock market among other peso-denominated
financial assets.
The SDA has allowed lenders’
trust departments to jack up their resources, with Chinatrust
Philippines Commercial Bank Corp. reporting that its trust unit’s
funds surged 800 percent to P8 billion at end-July from P1 billion
at the end of last year.
“Instead of using our trust
license to merely attract quasi-deposits, we focused on traditional
trust services that are actually in great demand among institutional
investors, foreign companies including Taiwanese companies, local
businesses and sole proprietors,” Joey A. Bermudez, Chinatrust
president said.
“Of course, when the SDA
product was made available to trust institutions, we immediately
mobilized our distribution network to capture a good share of this
business,” he added.
He said some 400 customers bought
this product and among them were several hundred new customers who
transferred from other banks.
Bermudez said the increase in the
bank’s trust accounts wasn’t accompanied by the reduction of
traditional deposit accounts, as the latter likewise grew to P18.2
billion last month from P16.2 billion in the same period last year.
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