Money supply growth in September remained healthy as banks continued to lend more to businesses and households, and as cash flowed into the country from overseas.
The steady increase in the amount of money circulating in the system, expressed as M3, showed there was available cash to fuel the country’s economic growth, the Bangko Sentral ng Pilipinas (BSP) said.
Increased bank lending to businesses that use the cash to produce goods and create jobs, as well as steady earnings from overseas, fueled M3 growth in September.
“Money supply remains sufficient to support economic growth,” the BSP said.
As of the end of September, the country’s money supply was 8.5 percent higher year-on-year. The rate of increase was,however, slightly slower than the 9-percent expansion in August.
Growth in bank loans led to an expansion of domestic assets. In a separate statement on Friday, the BSP said outstanding loans of universal and commercial banks rose 12.5 percent in September, down from 14 percent the month before.
Loans to industries or productive activities accounted for 80 percent of the banking industry’s total portfolio, while the rest was for consumption or the purchase of new homes and cars, among others, by households.
Net foreign assets also rose 6.9 percent on the back of strong overseas Filipino workers’ (OFW) remittances and revenue from business process outsourcing.
Banks’ assets overseas on a net basis were also up “due largely to the growth of their investments in marketable debt securities.”
Monetary authorities track M3 and bank lending growth to ensure financing conditions in the country are conducive to growth without triggering higher inflation. The BSP’s main goal is to keep consumer prices stable to protect the public’s purchasing power.
“The BSP will continue to ensure that domestic credit and liquidity conditions will keep pace with overall economic growth while remaining consistent with its price and financial stability objectives,” the central bank said.