BSP’s Diokno hints at possible quarterly cuts in banks’ reserve requirement

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno on Tuesday hinted at the possibility of easing the reserve requirement ratio once every three months during the next four quarters.

"If we have to ease, it's because it's really our reserve requirement ratio is very high. It's one of the highest in the world," he said in an interview aired on ANC television.

"I think there's room for monetary easing. It could be 1 percentage point every quarter for the next four quarters. We'll look at the data and see," he added.

The Philippine reserve requirement -- the amount of cash a bank must hold in its reserves against deposits made by customers -- currently at 18 percent is said to be one of the highest in the world.

This was cut by 2 percentage points in 2018, as former BSP Governor Nestor Espenilla Jr. said he wanted to cut this by half during his term which was supposed to end in 2023.

However, Espenilla passed away in February after battling tongue cancer for more than a year.

Diokno noted that the proper timing must first be considered before the reserve requirement ratios are reduced.

"Because every time we reduce our reserve requirement by 1 percent, that results to about 90 to a hundred billion pesos in the economy," he explained. — Jon Viktor D. Cabuenas/RSJ, GMA News