Domestic liquidity (M3), or the total money circulating in the economy, rose by 6.6% year-on-year to โฑ18.6 trillion in August, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP). This was faster than the 6.2% growth recorded in July.
On a seasonally adjusted month-on-month basis, M3 grew by 0.5% in August. M3 is a broad measure of money supply that includes currency in circulation, bank deposits, and other liquid financial assets.
- Claims on the domestic sector rose by 9.8% in August from 10.5% in July, reflecting continued lending to both government and private entities.
- Claims on the private sector grew by 11.1%, driven by bank lending to non-financial corporations and households.
- Net claims on the central government increased by 6.1%, supported by higher borrowings.
- Net foreign assets (NFA) in peso terms climbed by 4.8% in August, reversing the 0.6% decline in July. Both the BSP and banks recorded gains in NFA, with banksโ improvement aided by lower foreign currency-denominated payables.
The BSP said it will continue to manage liquidity conditions to ensure consistency with its price stability and financial stability objectives.
๐ M3 growth is closely watched because it influences inflation, lending, and overall economic activityโtoo much liquidity can drive up prices, while too little may slow down growth.
