Money supply hits P15.3 T end 2021
The central bank reported the country’s domestic liquidity (M3) or money supply totalled P15.32 trillion in December 2021, up by 7.7 percent compared to 2020's P14.22 trillion.
The Bangko Sentral ng Pilipinas (BSP) said on Monday, Jan. 31, that the December M3 growth is slower than November’s 8.3 percent expansion. On a month-on-month seasonally-adjusted basis, M3 rose by 0.2 percent, said the BSP.
“Domestic claims grew by eight percent year-on-year in December from 8.1 percent in the previous month due to the sustained expansion in net claims on the central government as well as the continued improvement in bank lending to the private sector,” said the BSP.
In December, the central bank said the net claims on the central government increased by 21.7 percent versus 24 percent in November. It said the government’s sustained borrowings pushed up net claims.
As for the private sector’s claims, this went up by 3.6 percent in December because of higher bank lending to non-financial private corporations.
The BSP said the net foreign assets (NFA) in peso terms rose by 6.5 percent in December but slower compared to 8.8 percent in November.
“The slower growth in BSP’s NFA position (reflected) the decline in the country’s gross international reserves relative to the same period a year ago,” said BSP.
The NFA of banks however increased as banks’ foreign assets increased on account of higher loans with non-resident banks, noted the BSP.
“The BSP will continue to monitor liquidity conditions closely in preserving adequate support to the domestic economic recovery, consistent with the BSP’s price and financial stability objectives,” said the BSP.
Earlier in January, BSP Governor Benjamin E. Diokno said he remained confident that despite a surge in COVID-19 variant, economic recovery will be sustained to achieve the targeted 7-9 percent GDP growth this year.
Diokno said that in terms of liquidity, there is sufficient support for the country’s recovery this year. As of November 2021, the central bank infused P2.3 trillion of bank funds as fresh liquidity in the financial system, equivalent to 12.5 percent of GDP.
“As you know, BSP has done quite a lot to support economic recovery,” said Diokno earlier. “On top of policy rate cuts to record lows and reduction in the reserve requirement, the BSP did extraordinary measures to boost liquidity in the financial system ... (and) once full recovery of the economy is underway, the BSP will implement a pre-planned exit strategy,” he said previously.
The BSP has a continuous comprehensive review and assessment of when to reduce or scale back the size of liquidity and COVID-19 relief measures to avoid financial distress post-pandemic.
Diokno has always said that the BSP is responsible for ensuring that there is sufficient liquidity in the financial system and to prevent the tightening of financial conditions and financial disintermediation.