The country’s domestic liquidity (M3) increased by 6.9 percent year-on-year in June to P15.4 trillion, the same level of M3 growth in May, according to the Bangko Sentral ng Pilipinas (BSP) on Friday, July 29.
Based on BSP preliminary data, on a month-on-month seasonally-adjusted basis, M3 rose by 0.7 percent in June.
“As the BSP proceeds with the withdrawal of monetary accommodation, it will continue to ensure that domestic liquidity conditions remain ample to support economic activity, consistent with the BSP's price and financial stability objectives,” said the BSP in a statement.
The BSP determines the level of money supply as part of inflation management. M3 is money supply. The BSP maintains a “predictable and stable” relationship between money, output and inflation.
The BSP said based on the latest M3, domestic claims was up by 9.6 percent year-on-year in June, a faster pace of growth compared to 8.9 percent in the previous month. This was because bank lending to the private sector improved in June.
Meanwhile, claims on the private sector grew by 8.7 percent in June from 7.5 percent in May with increased bank lending to non-financial private corporations and households, said the BSP.
As for the net claims on the central government, the BSP reported a 14.8 percent increase, slower than 15.3 percent in May because of sustained borrowings by the National Government.
The BSP said net foreign assets (NFA) in peso terms went up by 5.7 percent in June from 3.4 percent in May. The NFA of banks expanded at a faster pace on account of higher investments in marketable debt securities, it added.