The country’s monetary authority yesterday took the first small step toward its stated goal of freeing up more cash from banks’ vaults, which was seen to help fund the growing Philippine economy.
The move will free up an estimated P90 billion from bank vaults, which they could then use productively as loans to corporations, consumers or investments in equity or debt securities.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its policymaking Monetary Board approved the reduction in the reserve requirement 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,” said BSP Governor Nestor Espenilla Jr.
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The reduction will apply to the reservable liabilities of all banks and nonbank financial institutions with quasibanking functions with reserve requirement currently at 20 percent.
The reduction in the reserve requirement ratios will take effect on the reserve week beginning March 2, 2018, the BSP said.
