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Monetary Board Approves Dollar Repurchase Facility

10.20.2008

The Monetary Board approved on 17 October the opening of a US dollar repurchase agreement (Repo) facility to support the orderly functioning of the financial system as an effective channel of monetary policy. The US dollar Repo facility is expected to augment dollar liquidity in the market to help address any temporary market tightness at this time. In turn, this will help ensure the ready availability of credit for imports and other qualified funding requirements. For this facility, the Monetary Board approved the use of foreign-denominated sovereign debt securities (ROP) as collateral for loans availed.

The Board expanded the eligible collateral for BSP’s standing Peso Repo facility to include ROPs. The valuation for such collateral under both the peso and dollar Repo facilities will be under a revised scheme that is relatively more relaxed.
 
These measures will complement other existing BSP standing facilities such as the rediscounting window and the emergency loan facility. The rediscount window provides loans to banking institutions against eligible promissory notes on a short-term basis.  The BSP also extends emergency financial assistance to banking institutions with temporary liquidity needs.

Further, the BSP supports the proposed legislation that seeks to increase the maximum bank deposit guarantee to be provided by the Philippine Deposit Insurance Corporation in the context of an overall plan to strengthen the PDIC. 

Going forward, the BSP will continue to monitor market developments, including those in the credit market, and act as warranted.

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