Monetary Board reduces reserve requirements

October 24, 2019

The Monetary Board (MB) announced Thursday the reduction in the reserve requirement ratio by one percentage point for universal, commercial and thrift banks.

The MB complemented the move with a reduction in the reserve requirement for non-bank financial institutions with quasi-banking functions (NBQBs).

The reduction will be effective on the first day of the first reserve week of December 2019.

The reduction in reserve requirements will apply to the deposits and deposit substitute liabilities in local currency of banks and NBQBs:

Effectivity date: December 2019 Universal/Commercial Banks 14% Non-Bank Financial Institutions with Quasi-Banking Functions 14% Thrift Banks 4%

The reserve requirement reduction 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 adjustment in reserve requirement ratios is aimed to ensure sufficient domestic liquidity in support of economic activity. DMS