- September 29, 2019
- Posted by: admin
- Category: Daily News
- The level of deposits banks is required to keep with the central bank has been lowered by another 100 basis points to free up about PHP100bn into the financial system to support the economy.
- The Monetary Board, the policy setting body of the Bangko Sentral ng Pilipinas (BSP), approved the reduction of the reserve requirement ratio (RRR) for big banks by 100 bps to 15% from the current 16% effective the first week of Nov 19.
- Likewise, the BSP lowered the RRR for mid-sized banks by 100 bps to 5% from 6% and for small or rural banks also by 100 bps to 3% from 4%.
- “The cut in reserve requirements is in line with the BSP’s broad financial sector reform agenda to promote a more efficient financial system by lowering financial intermediation costs,” the central bank said in a statement.
- So far, the BSP has lowered the RRR by 500 basis points since 2018. “At the same time, the adjustment in reserve requirement ratios is aimed at increasing domestic liquidity in support of credit activity,” BSP added.
- The reduction came as a surprise as the market was expecting the BSP to wait for the release of the latest data on liquidity as well as bank lending scheduled for release on 30 Sep 19.