Domestic liquidity (M3) grew by 10.3 percent year-on-year to ₱20.5 trillion in July, continuing to support economic activity, preliminary data show.

​The latest M3 growth eased slightly from 10.7 percent in the previous month due to the contraction in net foreign assets (NFA).

M3 is a broad measure of money supply that includes currency in circulation, bank deposits, and other financial assets that are readily convertible to cash. NFAs refer to the difference between the claims of the BSP and banks on nonresidents and the liabilities of these depository corporations to nonresidents.

M3 growth in July continued to be driven by borrowings from both the private and public sectors. Bank lending continued to channel funds to production sectors and households. The National Government’s issuance of debt securities and withdrawal of deposits from the BSP and banks to finance spending also supported domestic liquidity growth.

By contrast, NFA contracted and led to slightly slower growth in domestic liquidity. Relative to the same period a year ago, the BSP’s NFA grew slower by 2.1 percent. Meanwhile, banks’ NFA contracted due to higher foreign-exchange-denominated liabilities, particularly bills payable. Bangko Sentral ng Pilipinas