BSP alerts PH on liquidity levels

Alliah Delgado | January 24, 2018

Photo from bworldonline.com

Liquidity in local financial systems had decreased over the past weeks, said Bangko Sentral ng Pilipinas (BSP) as calling out regulators to expedite timetables for reducing statutory bank reserves and leaving banks with lesser investable cash.

BSP Governer Nestor Espenilla Jr. had indications as early as last year, he desires to check the statutory reserves requirement reduced to "single digit levels" to allow the extra cash to be put on more productive projects like funding the administration’s planned P9-trillion infrastructure program.

Tighter liquidity was caused by the issuance of P255-billion retail Treasury bond by the national government and the traditionally lower level of free cash in the banking system during December and January, Espenilla said in an interview.

However, the central bank is more than willing to release more liquidity into the financial system, possibly by decreasing the current 20-percent reserve that banks are required to set aside from their deposits.

BSP noted that the setup of reserve requirement reduction will depend on the assessment of central bank on who are designated on keeping the prices of goods and services on point.