Bangko Sentral to cut reserve requirement as needed: Diokno

ABS-CBN News

Posted at May 20 2020 05:09 PM

MANILA - Bangko Sentral ng Pilpinas Governor Benjamin Diokno said Wednesday he was ready to cut banks' reserve requirement further should financial markets need more cash to circulate.

There is "so much" liquidity in the system after the reserve requirement ratio or RRR was reduced to 12 percent from 18 percent since he took over as governor, freeing up some P600 billion, Diokno told a Senate hearing. 

"Hinay-hinay lang po tayo (Let's be careful) but I can assure you that if there is a need for additional liquidity, BSP will cut the reserve requirement," Diokno said.

Diokno cut the benchmark interest rate by 125 basis points so far this year, 100 of which was delivered during the lockdown. He slashed 200 basis points off banks' reserve requirement ratio, with authority to cut it by another 200 points.

The governor earlier said his goal was to bring the RRR to single digit by the end of his term. Up to P100 billion is released in the system for every 1 percentage point cut in the RRR, he said.