MANILA, Philippines (UPDATE) - The Bangko Sentral ng Pilipinas (BSP) said on Wednesday it will consider proposals raised by local banks on revamping the structure of required reserves at its next policy meeting, with the aim of allowing authorities to better monitor money supply.
The central bank's policy-making Monetary Board holds meetings every Thursday but sets interest rates every six weeks, with the next rate review set on Dec. 1.
"In its policy review, the BSP will consider the issues and concerns raised by the different banking organisations," central bank Governor Amando Tetangco said in a statement.
"The proposals will also be evaluated in the context of prevailing macroeconomic conditions, both on the domestic and external fronts," he said, without giving details on the proposals.
The BSP held a meeting with banks on Oct. 25 to get feedback on a plan to revise the structure of reserve requirements, now at 21%, by merging liquidity and statutory reserves into one category and stopping interest payments on these funds set aside by lenders.
Authorities were also considering ending the practice of allowing banks to classify cash kept in their bank vaults as part of reserves, according to some bankers.
There is also concern among bankers that changes may lead to higher financial intermediation costs.
The central bank said the review was meant to strengthen the reserve requirement as a liquidity management tool, simplify its imposition and allow authorities to better track how banks comply with the reserve ratio.
The BSP raised the reserve ratio by a total of 2 percentage points in June and July in a bid to bring it back to its pre-global crisis level.