Domestic liquidity expands 7.6 percent in November

Domestic liquidity, or the amount of money circulating in the Philippine economy, grew by 7.6 percent year on year to PHP 19.4 trillion in November, according to preliminary data released by the Bangko Sentral ng Pilipinas.

The November growth in domestic liquidity, also known as M3, was slower than the 8.3 percent expansion recorded in October, indicating a modest easing in the pace of money supply growth.

On a seasonally adjusted basis, M3 rose by 1.2 percent month on month in November, reflecting continued but tempered liquidity expansion during the period.

M3 is a broad measure of money supply that includes currency in circulation, bank deposits, and other financial assets that can be readily converted into cash, making it a key indicator of overall liquidity conditions in the economy.

Claims on the domestic sector, which include both private and government entities and serve as a major driver of money supply, increased by 10.6 percent year on year in November from 10.5 percent in October.

These claims represent the liabilities of domestic sectors to depository corporations such as banks and the central bank, reflecting the extent of credit flowing through the financial system.

Claims on the private sector alone grew by 11.1 percent in November, up from 11.0 percent in the previous month, driven by the continued expansion of bank lending to nonfinancial private corporations and households.

Net claims on the central government rose by 11.0 percent in November from 10.0 percent in October, largely due to higher government borrowings during the period.

Net foreign assets in peso terms increased by 4.4 percent year on year in November, accelerating from the 2.1 percent growth posted in October, reflecting improvements in the external position of depository corporations.

Net foreign assets represent the difference between claims on nonresidents and liabilities to nonresidents of depository corporations, including both the central bank and commercial banks.

The Bangko Sentral ng Pilipinas reported that its own net foreign assets rose by 1.9 percent, while banks’ net foreign assets increased mainly due to lower foreign currency-denominated bills payable.

The central bank said it will continue to ensure that domestic liquidity conditions remain consistent with its objectives of maintaining price stability and safeguarding the overall stability of the financial system.