The expansion of the monetary base can proceed even if overnight rates are driven to their zero lower bound. The Federal Reserve has authority to purchase Treasury securities of any maturity and indeed already purchases such securities as part of its procedures to keep the overnight rate at its desired level. This authority could be used to lower interest rates at longer maturities.
As of end-December 2020, the banking system assets expanded by 6.1 percent year-on-year to ₱19.4 trillion. This was largely funded by deposits which grew annually by 8.9 percent. This suggests that the banking system continues to enjoy the confidence of the public amid the pandemic. Sustainable finance will play a big part in the economy’s recovery.