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THE
Bangko Sentral ng Pilipinas (BSP) would not be forced
into using the deposit reserves as an antiliquidity
weapon no matter that the alternatives it has used thus
far only made them P48.3-billion poorer.
BSP
Governor Amando Tetangco Jr. stressed this point in an
e-mail, saying adjustments to the existing deposit
reserve mix were not appropriate at this time.
“An
increase in reserve requirements would be a clear
tightening move which is not warranted at this time,
given the favorable outlook to inflation and which risks
are rather manageable,” he said.
This
means a recalibration of the deposit reserve mix, set at
the statutory level of 10 percent on top of the regular
reserve rate of 11 percent, was tantamount to using a
blunt instrument that saps the financial strength of
every Filipino regardless of stature.
The
reserve mix is that portion of deposit funds that banks
are mandated to set aside for contingency reasons and
which must not be lent out at any given point.
This
rule permits the banks to do whatever they please with
79 centavos of the depositors’ money as long as the 21
centavos are always held in reserve.
The
recalibration of the deposit reserve mix on July 15,
2005 was one of Tetangco’s first few key decisions as
BSP governor, having only assumed the post days earlier.
He
raised the deposit reserve mix by two percentage points
to 21 percent from 19 percent previously to try to put a
stop to market speculation on the strength—or lack of
it—of the peso at that time.
This
time, however, some have wondered what Tetangco and the
rest of the seven-man policymaking monetary board would
do with the reserve mix given their so-called foreign
exchange losses arising from sustained foreign inflows.
The BSP
still operates very much in the black from the
operational standpoint but has sustained forex losses
totaling P48.3 billion for the period January to
September, BSP data show.
Increasing the deposit reserves should take care of a
few billion pesos off the system that Tetangco need no
longer worry about sterilizing.
But in
the process he will punish both the saver and the user
of funds as the cost of intermediation goes up.
“We also
want to continue to encourage credit growth,” Tetangco
said, his concern for the ordinary entrepreneur showing.
Some
seven months earlier he had convinced the monetary board
to open a special deposit facility for banks and
financial institutions to help the BSP manage better
surging liquidity levels, encouraged by the firming up
of the country’s macroeconomic underpinnings.
“We had
opted at that time to enhance access to the SDA as a
liquidity management tool because this was a more
targeted approach to the liquidity risk on inflation
then,” he said. |
