BSP cuts reserve requirement by 200 basis points

The Bangko Sentral ng Pilipinas (BSP) has reduced the amount of cash banks are required to hold in reserve by 200 basis points, in efforts to calm financial markets and boost lending amid an enhanced community quarantine in Luzon.

In a post on Twitter on Tuesday, BSP Governor Benjamin Diokno said the reserve requirement ratio (RRR) reduction for all universal and commercial banks will take effect next Monday, March 30.

In a special MB meeting, I have been authorized to reduce the RRR of BSFIs for 2020, starting with 200 bps for U/Kbs effective Monday, 30 March 2020.

— Benjamin Diokno (@GovBenDiokno) March 24, 2020

"This will allow BSP the flexibility to PROMPTLY address any possible liquidity strain in the industry and ensure sufficient domestic liquidity amidst COVID-19," he said.

According to Diokno, the BSP is also looking into reducing the RRR for other banks and non-bank institutions under its supervision.

"Potential cuts on RRR for other banks and non-bank institutions will also be explored... BSP will soon issue guidelines on these adjustments," he said.

A day earlier, the central bank said it will purchase P300-billion worth of government securities to support government programs against the spread of COVID-19.

The BSP also last week slashed policy rates by 50 basis points, providing economic stimulus given the COVID-19 health crisis.—AOL, GMA News