By Lee C. Chipongian Economists at the University of the Philippines (UP) said it might come down to the Bangko Sentral ng Pilipinas (BSP) printing more banknotes to fund the government’s higher-than-projected cash aid or financing medical emergencies amid the virus outbreaks. The UP School of Economics’ (UP-Econ) Dr. Maria Socorro Gochoco-Bautista and Toby C. Monsod in a paper, “How can funds be raised for COVID-19 responses?”, said there are only four ways that the government can raise sufficient funds to continue the Social Amelioration Progam for example, originally budgeted at P200 billion, and of these four strategies, the BSP’s power to print extra money may just be the simplest solution. “BSP literally creates or prints money (out of thin air). This power to print money is the BSP’s most important power,” according to UP-Econ where BSP Governor Benjamin E. Diokno, an economist, was once a faculty member. Printing additional banknotes or making more money than programmed in a given period, usually is an inflationary risk but maybe not at this time of COVID-19. “In normal times, the BSP does not resort to printing money because it could pull up inflation. But these are not normal times; inflation is not a pressing problem in a contracted economy,” said UP-Econ. The two economists said banks are key factor if or when BSP decides to go this route. “If (banks) are hesitant to loan out money because they do not think SMEs can pay, or if SMEs/households are intimidated by them, then nothing happens. Brings up the question: how to encourage banks to lend? A guarantee from the DOF (Department of Finance) could help here.” In a scenario where BSP does print more banknotes, the paper explained that it will be a simple accounting entry. Banks’ “checking account” with the central bank is where the BSP will credit more money “which means banks can now make more loans.” It is similar in the manner that the Bureau of the Treasury also has a “checking account” with the BSP, they added. “When the BSP buys bonds from the Treasury, it credits this account in the same way, creating money for the Treasury to use.”