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Philippine central bank requires banks to hold longer-term liquidity buffer

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Philippine central bank requires banks to hold longer-term liquidity buffer

Bangko Sentral ng Pilipinas has approved guidelines to implement the net stable funding ratio, or NSFR, which is an international requirement for banks to maintain a liquid position that is sustainable for one year, Business World reported May 30, citing central bank Governor Nestor Espenilla Jr.

The new standard is a key reform under the international Basel III framework, and is a requirement on top of the liquidity coverage ratio, which requires big banks to hold high quality, easily convertible assets to cover projected net cash outflows over a 30-day period.

Espenilla said the guidelines will be published soon, and universal and commercial banks will undergo an "observation period" where their liquid assets will be monitored for the rest of this year. The full implementation of NSFR will start Jan. 1, 2019.

Additionally, BSP has rolled out the minimum liquidity ratio, which covers thrift, rural and cooperative banks, and is working on a regulation requiring intraday liquidity reports, the publication added.