Philippines Cuts Reserve Ratio to 5%

The central bank of the Philippines reduced the reserve requirement ratio for universal and commercial banks by 200 basis points to 5%, marking the first RRR cut of the year.

Additionally, the BSP lowered the RRR for digital banks to 2.5% and for thrift banks to 0%.

These adjustments will take effect on March 28 and apply to local currency deposits and deposit substitute liabilities of both banks and non-bank financial institutions with quasi-banking functions.

The central bank highlighted that reducing the reserve requirement ratios will help alleviate barriers that impede effective financial intermediation.

Moreover, the central bank reaffirmed its long-term objective of empowering banks to allocate their funds more efficiently toward productive loans and investments.