DEMAND for cash from the central bank’s rediscounting window fell even further in the first quarter, an indication that the country had more than enough liquidity to keep its economic engines running.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said only thrift and rural banks, which accounted for less than a tenth of the financial system, took out rediscounting loans.
Total availment amounted to P75 million as of the end of March, which is 81.8 percent lower than the P412 million total in the same period last year.
Out of the total, 70.6 percent went to commercial credits, 5.2 percent to production credits and 24.2 percent to other credits consisting of housing (12.5 percent), capital expenditures (7.6 percent), and permanent working capital (4.1 percent).
Demand for foreign exchange through rediscounting was also down. As of the end of March, only one universal bank took out a loan from the BSP worth $400,000, benefiting one exporter.
This represents a 78.9-percent decrease in availment from the $1.9 million granted in the same period last year.
Rediscounting allows banks to temporarily exchange loans for cash from the BSP.
The facility ensures that in times of tightness in credit, banks still have funds to lend to productive sectors of the economy.
The amount of cash circulating in the economy grew at an elevated pace from the middle of 2013 to late last year as a result of a ban on individual investments from BSP special deposit accounts (SDA). This forced banks to withdraw covered funds, cutting the amount of cash in SDAs by half to around P1 trillion.
Domestic liquidity growth in the country peaked in February of 2014 at around 37 percent.
Latest BSP data showed that money supply grew by just 8.5 percent in February 2015, reflecting efforts by authorities to tighten monetary conditions.