A permanent official funding agency reduces the probability of a panic-induced sudden stop in sovereign debt markets, which may be especially prevalent in a monetary union to the extent that traders believe that national sovereigns in a currency union have fewer stabilisation options in the event of a rollover crisis (Bianchi and Mondragon 2018).
Monetary policy was implemented with a view to sustain productive commercial bank lending and monetary operations conducted to ensure alignment of market interest rates with the monetary policy stance. Consequently, given the increase in liquidity that needed to be sterilised, outstanding BoBCs amounted to P8.2 billion in December 2018, an increase from P6.3 billion in December 2017.