Funds in the special deposit accounts (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) reached P1.87 trillion as of August 2.
BSP data showed that the funds in the facility rose by P18.58 billion from the recorded P1.75 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 in its last policy meeting. Since January, the central bank has reduced the SDA rate three times by a total of 150 basis points.
In a recent statement, a BSP official said that investors in the SDA facility were shifting their investment vehicle from investment management accounts (IMA) to deposit accounts.
BSP Deputy Governor Nestor Espenilla Jr. said that funds in the SDA facility have actually going down as the Monetary Board decided that all other SDA placements of trust departments/entities such as IMAs shall be reduced by at least 30 percent until July 30.
“We restricted the IMAs in SDA, but SDA remain as a window, so bank proper can still put money in SDAs. What we have said possibly what can happen is a shift,” Espenilla said.
He added that the central bank has seen withdrawals of IMAs and a reduction in the trust entities. However, it also noted an increase in the bank proper as investors are shifting to time deposit accounts.
“As people who used to place SDAs to the IMA—since that window is closing down instead of doing that way—people go to time deposits. They changed their investment vehicle from IMAs to time deposit. So we are seeing a decline in the trust placements, but we are seeing an increase in the bank placements,” he added.