Money

BSP cuts reserve requirement for bonds to 3%

BSP shuts down 5th rural bank in May

The Bangko Sentral ng Pilipinas has cut by half the reserve requirement ratio for bonds issued by banks to 3% in a bid to increase domestic liquidity.

The Bangko Sentral ng Pilipinas has cut by half the reserve requirement ratio for bonds issued by banks to 3% in a bid to increase domestic liquidity.

The new rate , which will be effective beginning Nov.1, follows the 100-basis points cut in banks’ RRR last month.

According to the BSP, the rate is lower than the 4% rate on other debt instruments like long-time negotiable certificates of time deposits.

The BSP said the move was in line with its commitment to “contribute to the deepening of the local debt market.”

“The lower bank reserves on bond issuances is expected to reduce the bond issuers’ intermediation cost that could be passed on to the holders of such securities,” the BSP said.

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