BSP cuts RRR anew by 100 bps

By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said yesterday they have reduced banks’ reserve requirement ratio (RRR) anew by 100 basis points (bps) for big banks and non-banks which will lower RRR to 14 percent by the first week of December.

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The 14 percent RRR will apply to universal and commercial banks and non-bank financial institutions, while thrift banks will have four percent RRR on their deposit and deposit substitute liabilities.

The BSP earlier decided to cut 100 bps off RRR effective in the first week of November. The Monetary Board, after December, has reduced RRR for a total 400 bps. The first 200 bps reduction to RRR was implemented end-July.

In a statement, the BSP said the RRR 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 BSP also said that “at the same time, the adjustment in RRR is aimed to ensure sufficient domestic liquidity in support of economic activity.”