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Domestic Liquidity Continues to Expand in September

10.30.2015

Preliminary data show that domestic liquidity (M3) grew by 8.5 percent year-on-year in September 2015 to reach P7.8 trillion. This was slightly slower than the 9.0-percent expansion recorded in August. On a month-on-month seasonally-adjusted basis, M3 increased by 0.1 percent.

Money supply continued to expand due largely to sustained demand for credit. Domestic claims grew by 12.4 percent in September from 13.0 percent in August. Credits to the private sector increased at a slightly slower pace relative to the previous month. The bulk of bank loans during the month was channeled to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; and financial and insurance activities. Meanwhile, net public sector credit rose by 15.4 percent in September, faster than the  14.5-percent growth (revised) a month earlier.

Net foreign assets (NFA) in peso terms grew by 6.9 percent in September from   7.9 percent (revised) in the previous month. The BSP’s NFA position continued to expand during the month on the back of robust foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts. The NFA of banks likewise increased as banks’ foreign assets expanded at a faster pace relative to that of their foreign liabilities. Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities, while banks’ foreign liabilities grew mainly on account of higher deposits and placements made by foreign banks with other banks.

The continued expansion of domestic liquidity during the month indicates that money supply remains sufficient to support economic growth. Going forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity in the financial system remains consistent with the BSP’s price and financial stability objectives.

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