BSP crafting operational details for debt issuance

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is set to craft the operational details of the planned issuance of negotiable certificate of indebtedness under its revised charter.

BSP Deputy Governor Maria Almasara Cyd Tuaño-Amador told reporters the signing of Republic Act 11211 by President Duterte last Feb. 14 gave monetary authorities an expanded toolkit as its authority to issue debt papers was restored.

“The central bank wants to have an expanded toolkit, a policy instrument, an arsenal of policy instrument that can be used to fine-tune monetary aggregates in the economy,” Amador said.

The monetary operations of the BSP refer to the buying or selling of government securities, lending or borrowing against underlying assets as collateral, acceptance of fixed-term deposits, foreign exchange swaps, and the use of other monetary instruments of the central bank aimed at influencing the underlying demand and supply conditions.

Open market operations include reverse repurchase or repurchase transactions, outright purchases and sales of securities as well as foreign exchange swaps. Its liquidity absorption facilities include the term deposit facility as well as overnight deposit and overnight lending facilities.

“The restoration of the authority to issue central bank debt papers, as with other central banks, enables them to use these instruments, particularly during times where you have a surplus. It’s a structural surplus liquidity absorption tool,” Amador said.

The amended BSP charter removed the condition that the issuance of certificates of indebtedness will be made only in cases of extraordinary movement in price levels.

Amador said the issuance of debt papers by the BSP would not compete with the issuance by the national government through the Bureau of the Treasury (BTr) such as retail treasury bonds (RTBs), treasury bills (T-bills), and treasury bonds (T-bonds).