After weeks of decline, funds in the special deposit accounts (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) finally recovered at the start of July.
BSP data showed that the funds in the facility stood at P1.756 trillion as of July 5.
Funds rose by P18 billion from the recorded P1.73 trillion a week ago. 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.
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.
SDA funds recorded weeks of decline as a result of the Monetary Board’s decision to restrict SDA placements of trust department/entities. The new rule said that investment management accounts (IMA) shall be reduced by at least 30 percent by July 30, while any remaining balance shall be phased out by 30 November 2013.
In a recent interview, BSP Deputy Governor Nestor Espenilla Jr. admitted that SDA placements are actually going down as investors are shifting their investment vehicle from IMAs to deposit accounts.
Espenilla added that the central bank has seen withdrawals of IMAs and a reduction in the trust entities. However, it also noted shifts to time deposit accounts.
Furthermore, Espenilla said that the central bank expects the possible shift of investments to regular deposits, time deposits, new exchange traded funds, or government securities.
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 SDA are basically aimed at making sure that the facility continues to be a monetary instrument rather than investment vehicle.