11.07.2008
The Monetary Board approved on 6 November the reduction of the regular reserve requirement on bank deposits and deposit substitutes by two percentage points effective 14 November. At the same time, the Board also increased the BSP budget for the peso rediscounting facility from P20 billion to P40 billion effective immediately. The two measures are aimed at preemptively ensuring the proper functioning of the interbank market and guarding against a possible liquidity or credit tightness arising from the global rise in risk aversion.
The reduction in the reserve requirement has been a medium-term policy objective of the BSP to lower banks’ intermediation costs, and the Monetary Board believes that present conditions provide room for a calibrated reduction. The Board also agreed to increase the budget for the rediscounting facility to allow more banking institutions to obtain loans from the BSP against eligible promissory notes for short-term liquidity needs.
Going forward, the BSP will continue to monitor financial and monetary developments, particularly those in the credit market, and act as warranted to shield the financial system from the adverse effects of the global financial crisis.
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