Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona emphasized the central bank’s commitment to strategically reduce banks’ reserve requirements ratio (RRR) when the time is right, stressing its impact on financial intermediation.
With a clear focus on enhancing the banking system’s efficiency, Remolona emphasized the significance of digitalization as a key enabler in this endeavor.
Though the RRR has already reached single-digit levels, the BSP remains resolute in its mission to further enhance the banking system’s efficiency. Notably, the BSP made substantial RRR cuts last month, injecting approximately P360 billion of fresh funds into the financial system, benefiting both banks and non-bank financial institutions.
Specifically, major banks and non-bank financial institutions witnessed a reduction of 250 basis points (bps) in their RRR, while digital banks experienced a cut of 200 bps, and thrift banks, rural, and cooperative banks saw a 100 bps decrease.
As a result, universal and commercial banks now maintain an RRR of 9.5 percent, down from 12 percent, and digital banks’ RRR stands at six percent, having been reduced from eight percent. Meanwhile, thrift banks’ RRR now sits at two percent, down from three percent, and rural and cooperative banks have an RRR of one percent.
These strategic adjustments in RRR apply to local currency deposits and deposit substitute liabilities of both banks and non-banks, in line with the BSP’s directives.