Banks' end-August special deposits total P909B – BSP

Special deposit accounts or SDAs of the banking industry with the Bangko Sentral ng Pilipinas (BSP) totaled P909 billion at end-August, up by 32 percent from P689 billion a year earlier. The SDA facility consists of fixed-term deposits by banks and trust entities of banks and non-bank financial institutions. It was introduced in November 1998 to enable the BSP to expand its tools in liquidity management. The BSP said investors continued to shift to high-yield SDAs, resulting in funds veering off reverse repurchase agreements or RRPs that is also a tool to siphon off liquidity from the financial system. RRP refers to purchase of securities from the central bank with an agreement to sell these back at a fixed date. BSP Gov. Amando Tetangco Jr. said the country's strong external payments position as shown in the balance of payments surplus of $3.3 billion as of end-July and the liquidity in the financial system could help fund more investments. "These funds are placed in the SDAs of the BSP but they are available if there is an increase in demand for loans. We have a favorable environment for foreign investments because of the favorable macroeconomic environment and benign inflation. You have a favorable macro environment and you have ample liquidity on the peso side as well as on the foreign exchange side, so the requirements of additional investments can be met with the sufficient liquidity," Tetangco said. SDA placements with the BSP, Tetangco said, would be released and would go to more productive sectors to support the country's economic activities. "If we are able to attract more investments because the productive capacity is there, that will be consistent with sustained and more durable economic growth," Tetangco said. The Philippine economy grew 7.9 percent in the second quarter of the year. —JE, GMANews.TV