The country’s monetary authority on Thursday took the first small step toward its stated goal of freeing up more cash from banks’ vaults which, it is hoped, would help fund the growing Philippine economy.
The move will free up an estimated P90 billion from bank vaults which they could use productively as loans to corporations, consumers or investments in equity or debt securities.
In a press statement, the Bangko Sentral ng Pilipinas said its policy-making Monetary Board approved the reduction in the reserve requirement ratio by 1 percentage point.
The move is “an operational adjustment to support the BSP’s shift toward a more market-based implementation of monetary policy as well as its broad financial market reform agenda,” BSP Gov. Nestor Espenilla Jr. said.
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The reduction will apply to the reservable liabilities of all banks and non-bank financial institutions with quasi-banking functions with reserve requirement currently at 20 percent.
The reduction in the reserve requirement ratios shall take effect on the reserve week beginning on Mar. 2, 2018, BSP said.
