THE growth of the volume of cash circulating in the local economy continued at a double-digit pace at the end of this year’s first quarter, as banks continued to lend strongly during the period.
In a report late Friday, the central bank said domestic liquidity—broadly measured as M3—rose to P8.5 trillion at end-March this year, registering a growth of 11.7 percent.
March’s liquidity growth was faster compared to the 11.2-percent revised acceleration recorded in January this year.
A growing cash supply is beneficial for a growing economy, as it gives fuel to productive sectors in the economy to increase the nation’s capacity to grow.
However, an excessively slow cash-supply growth in the economy may be bad for a nation, especially if it does not provide enough financing to keep productive activities going.
Amid the continued acceleration in the pace of money-supply growth, the Bangko Sentral ng Pilipinas (BSP) gave the assurance that the level of cash-supply growth is still enough to finance the growing economy.
“The sustained expansion of M3 during the month indicates that money supply remains sufficient to support economic growth,” the central bank said in a statement.
“Going forward, the Bangko Sentral will continue to monitor domestic-liquidity dynamics to ensure that monetary conditions remain in line with price and financial stability,” it added.
The continued expansion of domestic-liquidity growth during the month was attributed by the central bank to the sustained demand for credit.
In a separate report, the BSP said the growth of outstanding loans of banks went slower, contrasting to the money-supply growth for the period, registering at 14.8 percent in March this year. This is slower than the 16.9-percent growth in bank lending in January.
The expansion of loans was largely brought by loans for production activities. These comprise more then 80 percent of the banks’ aggregate loan portfolio.
Loans for production activities grew by 15 percent in February, slower than the 17.4 percent in the previous month.