Bangko Sentral ng Pilipinas cut the reserve requirement rate for bonds issued by banks to 3% as part of its efforts to encourage participation in the domestic bond market.

The central bank said Oct. 15 that the reserve requirement rate for bonds is lower than other debt instruments issued by banks such as long-term negotiable certificates of time deposits, which is currently at 4%. The lower rate is expected to reduce the bond issuers' intermediation cost that could be passed on to the holders of such securities.

The new reserve requirement ratio will take effect beginning Nov. 1.