BSP ramps up efforts to help Philippine economy

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) continues to ramp up efforts to flood the Philippine economy with money amid the chaos caused by the coronavirus disease 2019 (COVID-19) pandemic.

In a statement, the central bank said it was taking extraordinary measures to support domestic liquidity and complement the broad-based health and fiscal programs of the national government to mitigate the impact of the global virus outbreak.

“By ensuring sufficient liquidity in the financial system, the BSP aims to assist our financial intermediaries in responding to the needs of Filipino households and businesses amid these challenging times,” it said.

Among these measures include buying peso-denominated government securities in the secondary market until June or until market conditions return to normal.

 The central bank launched a P300 billion stimulus package after the BSP inked a repurchase agreement with the Bureau of the Treasury for the purchase of government securities with a maximum repayment of six months to fund programs countering the impact of COVID-19.

“The measure is aimed at reassuring market participants of demand for government securities should they need to liquidate their holdings, thus encouraging participation in the government securities auctions,” the BSP said.

The BSP has also scaled down the daily overnight reverse repurchase (RRP) volume offering since April 8 as necessary depending on liquidity conditions to encourage counterparties to lend in the interbank market or re-channel their funds into other assets such as government securities or loans.

The term deposit and overnight RRP facilities serve as liquidity absorption tool for the BSP to siphon off excess liquidity in the financial system to bring market rates closer to the central bank policy rate.