BSP Mops Up ₱1.8-T Excess Liquidity

The Bangko Sentral ng Pilipinas (BSP) has absorbed P1.809 trillion of excess liquidity from the financial system as of the end of October, with BSP bills accounting for most of the reduction in the money supply.

The BSP employs liquidity management measures to control inflation and actively manages excess liquidity. I Photo: Bangko Sentral ng Pilipinas Facebook

The BSP employs liquidity management measures to control inflation and actively manages excess liquidity.

Essentially, it enables banks to park surplus funds in the BSP's interest-earning monetary operations, thereby influencing the underlying demand and supply conditions for central bank money.

Out of the total P1.809 trillion, the BSP securities facility, which conducts auctions of two tenors every Friday, absorbed 40.6 percent or approximately P734.8 billion during the period.

In addition, the BSP reported a higher balance of payments (BOP) surplus of $3.246 billion as of the end of October, marking a reversal from the monthly deficits incurred over the last six months since April of the same year.

For the month of October, the BOP swung to a surplus of $1.51 billion, representing the first surplus since March, which amounted to $1.267 billion. Monthly deficits had been reported by the BSP since April, with the highest occurring in February at $895 million, subsequently reversed by the surplus in March.

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