Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Wednesday the bank will start the issuance of its own securities consisting of bills and bonds on Sept. 18, 2020.
Diokno said in a message to reporters the issuance formed part of its initiative to shift to more market-based monetary operations.
“BSP bills and bonds will be offered via auction. The auction volumes will be small at the outset, to be gradually scaled up depending on market response and consistent with liquidity forecasts,” Diokno said.
He said the inclusion of securities 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 framework.
“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,” he said.
Diokno said that for the initial offering, the BSP would auction 28-day BSP bills with an indicative offer volume of about P20 billion, subject to confirmation two days before the actual auction date.
The BSP and the Bureau of the Treasury signed a memorandum of agreement in July for the linkage of the BSP’s Monetary Operations System and the BTr’s National Registry of Scripless Securities. The signatories were Diokno and National Treasurer Rosalia de Leon. Finance Secretary Carlos Dominguez III was also present during the signing.
The connectivity of the BSP’s MOS to the BTr’s NRoSS is an integral part of the process for the issuance of BSP securities. The MOS is a web-based electronic platform that enables counterparties to participate in the BSP’s peso liquidity facilities.
The NRoSS of the Treasury is an electronic registry system for government securities and facilitates the settlement and recording of transfers of GS through an established interface with the trading platform for secondary market trades and the BSP’s Philippine Payment and Settlement System.
The MOS-NRoSS linkage will facilitate the seamless process of the auction of BSP-issued securities and the registry and recording of these securities to enable primary market issuance and secondary market trading.
The BSP’s ability to issue its own securities was restored following the amendments to the BSP Charter.