Funds in the special deposit accounts (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) declined by P47 billion as of June 28.
BSP data showed that the funds in the facility stood at P1.738 trillion. It was lower than the previous week’s level of P1.785 trillion.
SDA is a monetary facility instrument made available to banks for managing excess domestic liquidity in the financial system, the board noted, adding that trust departments of banks acting as trustees and trust entities are also given access to the facility.
The BSP has kept the interest rates on SDAs at 2 percent. It also reduced the SDA rate three times since January by a total of 150 basis points. The Monetary Board also decided that all other SDA placements of trust department/entities, such as investment management accounts, shall be reduced by at least 30 percent on or before July 31. It added that any remaining balance shall be phased out by November 30.
Earlier, BSP Governor Amando Tetangco Jr. said that the possible scenario on July 30 depends on what will be converted, adding that some of the funds may go into trust which is allowed for placement to SDA.
Tetangco added that the reforms that have been implemented in the SDA are basically aimed at making sure that the facility continues to be a monetary instrument rather than 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.