THE Monetary Board complemented the reduction in reserve requirements for universal and commercial banks (U/KBs) with a phased 200-basis-point reduction for thrift banks (TBs) and non-bank financial institutions with quasi-banking functions (NBQBs), as well as a 100-basis-point reduction for demand deposits and negotiable order of withdrawal accounts of rural and cooperative banks. This will take effect on May 31, 2019.
Moreover, long-term negotiable certificates of time deposit issued by all banks and NBQBs will have reduced and uniform reserve requirement ratio of 4.0 percent.
The reductions on reserve requirements will take effect for U/KBs, TBs, and NBQBs on the reserve weeks beginning May 31, 2019, June 28, 2019, and July 26, 2019.
The lower ratios will apply to all reservable liabilities except bonds and mortgage or chattel mortgage certificates as the Bangko Sentral ng Pilipinas (BSP) continues to assess the impact of a reduction in the reserve requirements on these instruments.
The BSP is also reviewing its existing framework on reserve requirements to align the regulations on deposit substitutes with the provisions of the amended BSP Charter. The refinements will support the BSP’s objectives of enhancing the effectiveness of monetary policy and deepening the domestic money market. (PR)