The Philippines: BSP cuts RRR

  • THE Bangko Sentral ng Pilipinas (BSP) will slash the reserve requirement ratio (RRR) of universal and commercial banks by 200 basis points (bps) to release additional liquidity into the market amid the coronavirus disease 2019 (COVID-19) outbreak.
  • The Monetary Board (MB) also authorized BSP Governor Benjamin E. Diokno to cut the RRR of BSP-supervised financial institutions up to a maximum of 400 bps for 2020 in a special meeting on 30 Mar 20, the central bank said.
  • The BSP said the RRR cut for big banks to 12% will take effect on 30 Mar 20 and added it will issue guidelines on the adjustment.
  • Diokno said in a text message that the 200-bps reduction will release about PHP180bn-PHP200bn into the financial system.
  • The central bank said potential cuts to the reserve requirements for other banks and non-bank financial institutions will also be explored.
  • “To properly calibrate reduction in the RR, the MB likewise authorized the BSP Governor to determine the timing, extent, and coverage of the reduction in the RR, taking into consideration the impact of COVID-19 on domestic liquidity,” the BSP said.

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