The Philippine central bank cut the reserve requirement ratio for banks by 1 percentage point to support a more market-based implementation of monetary policy.
Bangko Sentral ng Pilipinas said Feb. 15 that it will reduce the reserve requirement ratio to 19% from 20% starting the week of March 2. The reserve requirement ratio is the percentage of bank deposits and deposit substitute liabilities that banks maintain or deposit with the central bank.
The reduction will apply to the reservable liabilities of all banks and nonbank financial institutions.
The central bank said the move is part of its drive to gradually lessen its reliance on reserve requirements for managing liquidity in the financial system. It believes the reduction in reserve requirements will help mobilize liquidity in support of economic activity.
Central bank Governor Nestor Espenilla Jr. had signaled in 2017 that he plans to gradually lower the reserve requirement ratio to single-digit levels.