BSP Deputy Governor Diwa Guinigundo told journalists Friday that they will conduct market-sounding exercise to get stakeholders’ ideas “on the more acceptable instruments.”
“Everything is still preliminary at this point. Once we get the details on IRR (Implementing Rules and Regulations) we will first roll this out to the Monetary Board (MB) to allow us to do this market sounding exercises,” he said.
The BSP executive said the planned securities issuance will be part of the collateral for the central bank’s reserve repurchase (RRP) facility, which is being used as the policy rate and is one of the four liquidity mopping facilities of the BSP.
The other three facilities are the overnight lending facility, overnight deposit facility and the Term Deposit Facility (TDF).
Guinigundo said that if the BSP will have more collateral for the RRP, the policy rate will be more market-based and more market-oriented.
He believes that the BSP needs to get MB’s approval to start the market-sounding activity, thus, the importance of the roadmap.
He, however, declined to indicate a time table for the formulation of the roadmap.
“We will announce as it is available. They are already doing the ground works,” he said.
Guinigundo said the possible BSP securities issuance will not compete with that of the Bureau of the Treasury (BTr).
“Far from it…So even in case there is a need, let’s say to issue long-dated securities, it should be one-off,” he added.