Given the current regime of low interest rates – driven in large part by the surge of foreign capital into domestic financial markets and the limited absorptive capacity of the economy in the short term – the BSP is keeping a watchful eye on developments in the asset markets.
In addition, the ABS purchase program was initiated to activate the market through purchases of securities and promote the securitization market for bank loans, including those for SMEs. The ECB thus continues to place the priority on credit easing as the banking system has not yet fully recovered its financial intermediary function arising from the global financial and European debt crises.