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BANGKO
Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr.
has refused to be intimidated by calls for the
withdrawal of the banks’ special deposit accounts (SDAs)
and declared Friday these will continue to be available
until further notice.
At the
annual meeting of members of the Chamber of Thrift Banks
(CTB), Tetangco said the SDAs, which have made the sale
of government securities much harder than usual for
Finance Secretary Margarito Teves in recent weeks, may
be reviewed at some point forward, but in the meantime
they will be freely available to banks and financial
institutions such as trust entities. “We need a certain
flexibility in controlling money-supply [M3] growth,
which was why we expanded its coverage in May 2007 when
M3 growth grew more than 26 percent,” Tetangco told the
CTB.
He said
the facility was particularly effective in managing the
flow of money coming from the conversion of foreign
funds as loan proceeds and the remittances of overseas
Filipino workers.
He said
the foreign inflows overwhelm demand and the mismatch is
feared to ramp up inflation unless managed effectively.
“We
remain committed to maintaining money supply growth that
is consistent with the inflation target,” Tetangco said
of the goal to limit inflation this year to a range of 3
percent to 4 percent.
Rampaging money-supply levels could upset the stability
of prices, something that Tetangco, no matter that
Secretary Teves finds it more difficult to sell
government securities, cannot afford to let go at this
point.
Banks
lap up SDAs as domestic interest-rates retreat to
all-time lows, a situation that is itself a consequence
of the success in consolidating the fiscal sector.
Banks
would rather put their money in SDAs where returns are
priced off Treasury bills that pay only 3.673 percent at
the moment.
SDAs pay
5.5 percent for placements as short as two weeks and as
long as six months.
Tetangco
brushed aside the issues raised against SDAs, saying the
instruments have been around as early as 1993 and have
proven useful.
Camarines Sur Rep. Luis Villafuerte has initiated an
investigation into the nature and justification for the
continued availability of SDAs. |
