Money Supply in the Philippines

The money supply is the total stock of money circulating in an economy. The circulating
money involves the currency, printed notes, money in the deposit accounts, and in the form of
other liquid assets.
The data of the money supply in the Philippines shows that there is slowing growth of
money supply in the country. There has been an increase in the percentage of money supply for
the past years but it is a slower growth compared to the previous records. The average value for
the billion currency unit in the Philippines from December 2001 to August 2020 was 5384.66
billion in Philippine Peso with a minimum of 1700.16 billion Philippine Peso in January 2002
and a maximum of 12930.91 billion Philippine Peso in May 2020.
Money is a vital part of the economy. Money is used in virtually all economic
transactions; it has a powerful effect on economic activity. The supply of money in a country is
one of the few determinants of the status of the economy. The money supply has an impact on
the economy as well as specific sectors in the country. The money supply provides information
and hints about the possible condition of the economy in the future. It also determines the level
of prices and inflation. Knowing this, the slowing increase in the money supply in the
Philippines can be a reflection of the condition of the economy, which could also be undergoing
slow growth as well.
In 2002, the Philippines formally adopted Inflation Targeting as the framework for
monetary policy. It focuses on maintaining a low level of inflation, that which is considered
optimal or at least would allow the country to have ample economic growth. Could this be one of
the reasons that the money supply of the country has had a slow growth in the past years?
Having read articles on the money supply in the Philippines made me ponder on how the
monetary policy of the country affects the money supply which then influences the interest and
inflation rate and ultimately how money supply affects the macroeconomy. If the growth rate of
money supply declines just as what the country is experiencing, there would be an increase in
interest rate, which results in to decrease in investment as well. Rates of consumption also tend
to go down. With the slowing growth of the money supply, the economy could easily fall into
recession. In light of this, what would be the best action for the government to take in order to
avoid possible mishaps in the economy due to the slowing growth of the money supply?
Money as one of the forces that drive the economy should essentially be closely
monitored in order to predict future behavior and patterns in the economy. Money supply often
mirrors the condition of the economy and it helps in making future decisions of consumers. It
aids us in making rational choices and come up with more efficient way to spend our resources.