Central bank defends special deposit accounts

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) defended its decision to keep special deposit accounts (SDA), saying it will continue paying high interest to institutional investors as long as there was demand.

This was announced on Monday by BSP deputy governor Diwa C. Guinigundo, who attempted to defuse criticism that the SDAs were making less funds available for companies.

By paying investors high interest rates, SDAs – as a monetary tool –siphoned off cash from the financial system, reducing liquidity and thereby cutting inflation risks.

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