In its weekly securities auction, the Bangko Sentral ng Pilipinas (BSP) raised P100 billion, indicating the country’s financial system has ample liquidity.
On Friday, the central bank’s one-month BSP Bill was oversubscribed by 1.21 times the offered amount of P100 billion, totaling P120.92 billion in offers.
In a statement, central bank Deputy Governor Francisco Dakila Jr. said, “The results of the auction continue to support the view that market conditions remain normal amid sustained ample liquidity in the financial system.”
He went on to say that, despite strong market interest, the weighted average interest rate continued to fall, settling at 1.7739 percent, down 0.947 basis points from the previous week’s rate. Accepted yields have dropped, but the range widened to 1.763-1.800 percent.
Going forward, the Bangko Sentral’s monetary operations will be led by its assessment of the most recent liquidity conditions and market developments, Dakila said.
BSP securities are monetary instruments provided by the BSP for its monetary-policy implementation and liquidity-management operations under the interest rate corridor system.
Along with government-issued securities that can be exchanged for liquidity, the securities will add to the pool of risk-free assets in the financial system.
The issuance of such securities will lead to improved market discovery for debt instruments and help monetary policy transmission through frequent auctions of BSP securities.
Republic Act (RA) 11211 restored the central bank’s authority to grant negotiable certificates of indebtedness, even in normal times. RA 11211, which was signed into law in February 2019, amended RA 7653, also known as the “New Central Bank Act of 1993.”
Prior to the amendment, the BSP could only issue debt offerings if there were significant price changes.
Bangko Sentral Governor Benjamin Diokno previously stated that monetary authorities were still looking for ways to enhance the securities and make them more market-friendly.
BY MEYNARD DELA CERNA