Philippines Cash Reserve Ratio

The central bank of the Philippines cut the reserve requirement ratio for universal and commercial banks by 250bps to 7% on September 20, 2024, delivering another significant reduction in just over a year. The bank also lowered the RRR for digital banks to 4%, thrift banks to 1%, and rural and cooperative banks to 0%. The new ratios will take effect on October 25 and will apply to the local currency deposits and deposit substitute liabilities of banks and non-bank financial institutions with quasi-banking functions. The BSP noted that these adjustments align with its continuing efforts to reduce distortions in the financial system. The reductions will lower intermediation costs and promote better pricing for financial services. Last month, the central bank also slashed its benchmark rate by 25bps to 6.25%, marking its first cut in nearly four years amid an improving inflation outlook.