By Eileen A. Mencias

The central bank yesterday said there is ample liquidity in the system but warned that the tightening of credit standards will have a negative impact on corporate earnings and eventually on banks.

“As far as the BSP [Bangko Sentral ng Pilipinas] is concerned, we have done our share in providing liquidity,” Bangko Sentral Deputy Gov. Diwa Guinigundo said at a briefing yesterday. “... we have brought down our policy rates and we are hoping banks can pass this on to borrowers to reduce the cost of money.”

Bangko Sentral managing director Cyd Tuaño Amador said the central bank had noticed reduced lending rates although its survey showed tightening credit standards.

Tighter credit standards, which may come in the form of stricter documentation and collateral requirements, may raise the cost of borrowing for some or make it more difficult for others to get credit.

Amador said loan officers of banks had tightened their credit standards because of the uncertain economic outlook.

Guinigundo said the growth in money supply as well as the loans outstanding of banks indicated that the supply of money in the system was enough to service demand, adding that it was up to the corporate sector to tap the funds by borrowing from banks, floating bonds or raising money in the equities market.

“Liquidity and bank lending continue to post strong growth indicating ample liquidity,” Amador said. “While there seems to be a tightening of credit standards, the banking system remains stable and able to perform its role as intermediary of funds.”