At its meeting on 23 May 2019, the Monetary Board complemented the reduction in reserve requirements for universal and commercial banks (U/KBs) with a phased 200-basis-point reduction in the reserve requirements for thrift banks (TBs) and non-bank financial institutions with quasi-banking functions (NBQBs), as well as a 100-basis-point reduction for demand deposits and NOW accounts of rural and cooperative banks to be effective on 31 May 2019. Moreover, long-term negotiable certificates of time deposit issued by all banks and NBQBs will have reduced and uniform reserve requirement ratio of 4.0 percent.

The reductions on reserve requirements will take effect for U/KBs, TBs, and NBQBs on the reserve weeks beginning 31 May 2019, 28 June 2019, and 26 July 2019. The lower ratios shall apply to all reservable liabilities except bonds and mortgage/chattel mortgage certificates as the BSP continues to assess the impact of a reduction in the reserve requirements on said instruments.

The BSP is also reviewing its existing framework on reserve requirements to align the regulations on deposit substitutes with the provisions of the amended BSP Charter. The resulting operational refinements will support the BSP's medium-term objectives of enhancing the effectiveness of monetary policy and deepening the domestic money market.

Source: Bangko Sentral ng Pilipinas (BSP)