Latest Stories

ADB backs BSP bid to trade own bonds

Agency needs additional tool to stem surge in liquidity



The Asian Development Bank has backed calls for the Bangko Sentral ng Pilipinas to be given the authority to issue and trade its own bonds, citing the need for additional tools to mop up excess liquidity given the threats of potential surges in foreign-exchange inflows.

Because of near-zero interest rates in stimulus measures in advanced economies, emerging markets like the Philippines have witnessed a rise in foreign portfolio investments. The Philippines is believed to have become even more prone to spikes in foreign-exchange inflows following its attainment of an investment grade status in March.

Although portfolio flows are welcome, excessive amounts pose threats of higher inflation and steep exchange-rate appreciation.

Neeraj Jain, country director of the ADB for the Philippines, said the BSP was recognized for having effectively managed liquidity in the economy. He said that having additional tools to address inflationary pressures would come in handy when threats of a surge in foreign capital happen.

If the BSP is allowed to issue and trade its own bonds, it is can sell more securities in the market if liquidity that needs to be mopped up becomes even more significant.

The BSP is not allowed by its charter to issue its own bonds. It trades mostly government securities in its open-market operations.

“There is a need to look at [and amend] the BSP’s charter to expand the tools it has in its disposal to effectively conduct monetary policy and ensure economic growth that comes with a stable inflation environment,” Jain said.

Jain said that last year, the BSP handled well the inflationary threats arising from significant foreign-exchange inflows. He said the BSP could be even more effective in dealing with excess liquidity if it has its own securities to trade.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Asian development bank , Bangko Sentral ng Pilipinas , Bonds , Business , liquidity

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Camilla’s brother dies of NYC head injury
  • Nepal officials go to Everest to try to end crisis
  • Escudero ready to defend self should name appear in Napoles’ list
  • Obama calls for peaceful end to island dispute
  • Russia not abiding by agreement on Ukraine—Obama
  • Sports

  • Promoters Dela Hoya, Arum in talks for Pacquiao-Alvarez—report
  • Benzema guides Madrid to 1-0 win over Bayern
  • Suns’ Goran Dragic win NBA’s Most Improved Player award
  • Heat go up 2-0, hold off Bobcats 101-97
  • Ronaldo shakes off injury fears to play Bayern
  • Lifestyle

  • Photos explore dynamics of youths’ sexual identity
  • 12th Philippine Food Expo set at the World Trade Center
  • No tourist draw, Malang the croc will remain wild
  • The best flavors of summer in one bite, and more
  • Homemade yogurt, bread blended with pizza, even ramen
  • Entertainment

  • Has Ai Ai fallen deeply with ‘sireno?’
  • Sony developing live-action Barbie comedy
  • California court won’t review Jackson doctor case
  • Return of ‘Ibong Adarna’
  • Practical Phytos plans his future
  • Business

  • Facebook profits triple as mobile soars
  • Insular Honors Sales Performers at Testimonial Rites
  • Apple increases stock buyback, will split stock
  • Cost-recovery provisions for affected gencos urged
  • This time, BIR goes after florists
  • Technology

  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Opinion

  • Editorial cartoon, April 24, 2014
  • Talking to Janet
  • Respite
  • Bucket list
  • JPII in 1981: walking a tightrope
  • Global Nation

  • PH-HK relations repaired, but families of victims still being courted
  • Filipinos in Middle East urged to get clearance before returning
  • PH seeks ‘clearer assurance’ from US
  • China and rivals sign naval pact to ease maritime tensions
  • What Went Before: Manila bus hostage crisis
  • Marketplace