THE Bangko Sentral ng Pilipinas (BSP) announced on Wednesday that it will start issuing its own securities on September 18.
The securities offer is part of the Central Bank’s initiative to shift to more market-based monetary operations. BSP Bills and Bonds will be offered via auction.
For its initial offering, the BSP said it will auction 28-day BSP Bills with an indicative offer volume of about P20 billion subject to confirmation two days before the actual auction date.
According to its statement, auction volumes will be small at the outset, and will be gradually scaled up depending on market response and consistent with liquidity forecasts.
“The inclusion of BSP Securities issuance in the standard monetary operations of the BSP provides an additional instrument for managing liquidity in the financial system and support the implementation of monetary policy under the Interest Rate Corridor (IRC) framework,” the BSP said.
“The issuance of BSP Securities is part of the operational enhancements to the IRC framework and does not represent a change in the BSP’s monetary policy stance. Moreover, the issuance of securities by the BSP will add to the existing supply of risk-free financial instruments in the banking system, which in turn could help in the development of the local bond market,” it added.
Republic Act 11211, which was passed last year, amended RA 7653 (The New Central Bank Act), thus restoring the BSP’s authority to issue its own debt securities as part of its instruments for regular monetary operations.
Previously, the BSP was only allowed to issue its own debt securities in cases when there are extraordinary movements in price levels.
The BSP said the restoration of its ability to issue its own debt securities is beneficial to the economy, as it provides with an additional monetary instrument for absorbing financial system liquidity.
“The issuance of BSP securities complements the other short-term monetary policy tools used by the BSP to manage liquidity in the financial system, such as, the term deposit facility, overnight reverse repurchase facility, overnight deposit facility and overnight lending facility,” the BSP said earlier.
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