Local banks have been able to maintain healthy levels of liquidity over the first two months of the year, with official data showing a plunge in the amount of borrowing from a special window provided by the Bangko Sentral ng Pilipinas.
Latest data from the BSP showed a 96.5 percent fall in the total amount of peso rediscount facility (PRF) availed of by thrift and rural banks to P282 million in January and February.
This compares with P8.1 billion recorded in the corresponding two-month period last year.
Commercial banks did not avail of the peso rediscount window during the period, according to the data.
Nicholas Antonio Mapa, an economist at the Bank of Philippine Islands, said that the drop in bank borrowing from the BSP window shows that local banks have “healthy” liquidity.
“A lower amount of availment simply means less banks were making use of the facility, most probably because they are not faced with liquidity constraints. This theory makes sense given that the financial markets are teeming with cash as of the moment, with the latest M3 [domestic liquidity]print at roughly 38-percent growth,” he said.
Domestic liquidity was up 38.6 percent year-on-year at P6.9 trillion as of the end of January 2014. The increase was faster than the 32.7-percent expansion recorded in December 2013. Month-on-month, the seasonally-adjusted M3 rose 5.5 percent, following the 1.5-percent contraction in the previous month. Money supply continued to expand from higher demand for credit in the domestic economy.
“Since there is so much liquidity in the financial markets and banks are generally healthy, there is less need for banks to use the rediscount window of the BSP,” the BPI economist added.
Under the BSP exporters dollar and yen rediscount facility (EDYRF) based on the London Inter-Bank offered rates, consolidated dollar amounts availed of by thrift banks for January and February dropped by 97.7 percent to $800,000 from $34.3 million in the same time period last year.