SDA deposits down 7% as of August
Kathleen A. Martin (The Philippine Star) - September 17, 2013 - 12:00am

MANILA, Philippines - Money in the central bank’s Special Deposit Accounts (SDA) continued to decline in August, the Bangko Sentral ng Pilipinas reported yesterday.

This, as the BSP has put in place measures to limit money deposited in the facility and encourage investors to channel funds to more productive activities.

Money deposited in the SDA facility slid seven percent to P1.6287 trillion as of Aug. 30 from P1.77 trillion as of Aug. 2, BSP data showed.

The current level, which was the lowest recorded so far this year, was also below the P1.638-trillion recorded in December last year.

“This is still part of the process of winding down the SDA,” BSP Deputy Governor Diwa C. Guinigundo said.

The SDA facility was introduced in 1998 as a tool for mopping up excess liquidity in the system. However, the falling interest rates in the recent years prompted investors to park their funds in the facility instead of other financial instruments.

In order to reduce the amount of money in the SDA, the BSP cut the interest rates on the facility by 150 basis points this year to two percent.

At the same time, the central bank has ordered the removal of 30 percent of singular investment management accounts (IMA) in the SDA by end-July, with the remaining 70 percent to be phased out by end-November.

One of the reasons behind the BSP’s restrictions on the facility is to allow money flow into other activities that would boost economic growth.

Following the decrease in the level of funds in the SDA, domestic liquidity or M3 grew at its fastest pace since December 2002 in August.

M3 expanded by 30.1 percent to P6.03 trillion in July, largely driven by an increase in loans extended to the domestic sector and partly due to money flushed out of the SDA.

 

BANGKO SENTRAL BSP DEPUTY GOVERNOR DIWA C FACILITY GUINIGUNDO MONEY PILIPINAS SDA SPECIAL DEPOSIT ACCOUNTS
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