MANILA, Philippines -- The Philippine government may stop issuing 364-day Treasury bills this year because banks keep demanding higher yields, National Treasurer Omar Cruz said on Monday.
***Scenario. Banks demand higher yields. Why? They have so many cash. Government refuses to sell. Why? It is also awash with cash. What should the banks do? Give out business loans, hoping to earn from their excess funds. What should happen? Businesses have a lot of available (loanable) funds. If confidence is high, this should also lead to more active businesses - higher production, increase in number of jobs, etc. What is missing? Businessmen do not fully trust the country's managers. Confidence for development is still in the mire. Hence, the excess funds go to deposits.
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