Domestic Liquidity Expands Faster in January

Preliminary data show that domestic liquidity (M3) grew by 11.9 percent year-on-year to about ?12.8 trillion in January 2020, faster than the 11.3-percent expansion (revised) in December 2019. On a month-on-month seasonally-adjusted basis, M3 increased by 1.3 percent.

Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 11.7 percent in January from 10.6 percent (revised) in the previous month due mainly to the sustained growth in credit to the private sector. Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; electricity, gas, steam and airconditioning supply; information and communication; and construction.

Loans for household consumption increased due to faster growth in credit card and motor vehicle loans during the month. Meanwhile, net claims on the central government rose by 31.9 percent in January 2020 from 23.8 percent (revised) in December 2019, due in part to the decline in deposits by the National Government with the BSP.

Net foreign assets (NFA) in peso terms expanded by 8.7 percent in January from 8.9 percent (revised) in the previous month. The BSP's NFA position grew during the month, supported by foreign exchange inflows coming mainly from overseas Filipinos' remittances and business process outsourcing receipts. Similarly, the NFA of banks increased due to the sustained expansion in banks' foreign assets resulting from the growth in foreign loans and deposits with other banks.

The BSP will continue to monitor domestic liquidity dynamics to ensure that overall monetary conditions remain consistent with maintaining price and financial stability.

Source: Bangko Sentral ng Pilipinas (BSP)