Term Deposit Facility (TDF)
The TDF is a key liquidity absorption facility, commonly used by CBs for liquidity management. Due to the BSP?s inability to issue its own debt instruments except in cases of extraordinary movement in price levels under R.A. 7653, the TDF is tasked to withdraw a large part of the structural liquidity surplus from the financial system to bring market rates closer to the BSP policy rate.
(Update: Under the amended BSP charter (R.A. 11211), the issuance of central banks securities is now part of the BSP's instruments for regular monetary operations, in line with the international central bank practices. Preparations are currently under way for the eventual issuance of BSP securities.)
The BSP currently offer three tenors? 7 days, 14 days and 28 days?in its weekly term deposit auction.
The TDF is operated using a variable-rate, multiple-price tender (English auction).
The table below presents the features of the TDF.