The central bank has deferred the reporting of banks’ intraday liquidity, originally scheduled for June this year, to January 2022 which put off a much tighter monitoring of fund flows.
The Bangko Sentral ng Pilipinas (BSP) effectively delayed the transitory provision on selected reports which have a frequency of monthly submissions. These reports will help the BSP to ensure a smoothly functioning payment and settlement systems and also puts emphasis on the need to measure and anticipate the timing of intraday inflows and outflows.
The BSP memo on Circular No. 1123 (Amendments to Guidelines on Report on Intraday Liquidity of Universal and Commercial Banks and their Subsidiary Banks/Quasi Banks), which was approved by the Monetary Board last July 13, did not state a specific reason for the transitory provision adjustment.
The intraday liquidity reporting guidelines under Circular No. 1064, approved on December 3, 2019, covered the daily monitoring of all BSP supervised financial institutions’ (BSFIs) liquidity requirements.
These are universal and commercial banks and their subsidiary thrift banks or quasi-banks, as well as stand-alone thrift and rural banks.
The monitoring of intraday liquidity position is an effective way for the BSP to assess and review if banks are meeting their intraday obligations on a timely basis.
The BSP will be requiring an intraday liquidity metrics that are consistent with international standards such as daily maximum intraday liquidity usage, intraday throughput, gross payments sent and received, and available intraday liquidity position, among other metrics.
Stand-alone thrift banks, quasi-banks, and rural/cooperative banks are not required to submit an intraday liquidity report because of lower volume of payments and settlements, but they should be prepared and submit the required information to the BSP when needed.
Still, these stand-alone BSFIs will have to maintain what the BSP said should be an “adequate and reliable management information system” to measure and monitor selected intraday metrics.
The intraday liquidity report is expected to encourage covered banks and quasi-banks to “adopt a systematic and disciplined approach in managing their intraday liquidity”. In turn, these reports will allow the BSP to conduct a detailed analysis of the resilience of the covered banks and quasi-banks to
intraday liquidity shocks and monitor how intraday liquidity risk evolves over time, said the BSP.
The reporting of intraday liquidity is part of the BSP’s enhanced liquidity risk management rules. It is also supposed to complement the qualitative intraday risk management guidelines under an older rule or Circular No. 981.