Funds in the special deposit accounts (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) further recover as it stood at P1.8 trillion as of July 12.
BSP data showed that the funds in the facility rose by P36 billion from the recorded P1.7 trillion in the previous week.
SDA is a monetary facility instrument made available to banks for managing excess domestic liquidity in the financial system. Trust departments of banks acting as trustees and trust entities are also given access to the facility.
Benign inflation has allowed the BSP to keep the interest rates on SDAs at 2 percent last week. Since January, the central bank has reduced the SDA rate three times by a total of 150 basis points.
In the newsletter The Market Call, First Metro Investment Corp. and the University of Asia and the Pacific said that tightening the screws on SDAs had paid off in terms of growth in money supply in May.
It said that M3 or total domestic liquidity accelerated to 16.3 percent, from 13.3 percent in the previous month.
“This was attributed to a more rapid expansion in net domestic assets, as banks channeled more funds to lending activities,” it said.
The report added that outstanding loans of commercial banks expanded by 13.1 percent from 12 percent in April.
“Given that the construction sector has been the leading sector of the economy, lending to real estate, renting and business services increased by 24.3 percent,” it said.