BSP's PhilPaSS transactions down 6.9% in second quarter

MANILA, Philippines - The total value of financial transactions that passed through the central bank’s Philippine Payments and Settlements System (PhilPaSS) eased by 6.9 percent in the second quarter of the year as the Bangko Sentral ng Pilipinas (BSP) lifted liquidity enchancing measures since the start of the year.

BSP reported that the value of transactions of PhilPaSS operations reached P46.1 trillion in the second quarter of the year or P3.5 trillion less than the P49.5 trillion worth of transactions booked in the first quarter due to lower transactions involving delivery-versus-payments (DvP), electronic delivery-versuspayments (eDvP), Cash Department and Treasury department of BSP, Megalink, Electronic Funds Transfer Instruction Systems (EFTIS), and the Philippine Clearing House Corp. (PCHC).

In the second quarter, BSP said PhilPaSS operations posted a decline in the volume of large-value financial transactions by 1.3 percent to 198,837 from the first quarter due primarily to the decline in the grant of loans and maturity collections that initially passed through the Core Financial Accounting System (cFAS) owing to the reduction in the peso rediscounting budget in March 2010. 

Since the start of the year, the BSP has lifted several liquidity-enhancing measures introduced starting November of 2008 in light of the strong economic recovery. It would be recalled that monetary authorities introduced severeal crisis-related measure to release more liquidity into the financial system to cushion the impact of the global financial crisis.

Since January, the central bank tweaked several measures including the increase in the rate on a short-term lending facility to four percent from 3.5 percent as well as the reduction of the peso rediscounting budget from P60 billion to P40 billion and further to P20 billion.

The central bank also restored the loan value of all eligible rediscounting papers to 80 percent from 90 percent of the borrowing bank’s credit instrument and at the same time revived the non-performing loan (NPL) ratio requirement of two percentage points from 10 percentage points above the latest available industry average NPL for banks wishing to avail of the rediscounting facility.

However, authorities decided to keep its key policy rates at record lows due to benign inflation outlook. The BSP slashed its key policy rates by 200 basis points between December of 2008 to July of 2009 bringing the overnight borrowing rate at a record low of 4.0 percent and the overnight lending rate at 6.0 percent.

The BSP explained that the volume of transactions fell by 16.1 percent in the second quarter of the year compared to the second quarter of last year while the value plunged by 38.7 percent on account of lower transactions that initially passed through the cFAS.

The central bank added that both value and volume declined despite the fact that the BSP allowed remittances from overseas Filipino workers to pass through the PhilPaSS last May to ensure a safe and efficient delivery of financial transactions from the remitting branch to the beneficiary’s account maintained with local banks. 

The BSP said OFW remittances for the quarter covered 29,810 transactions worth P39.8 billion.