BOHOL – The Bangko Sentral ng Pilipinas (BSP) is in no rush to further reduce banks' reserve requirement ratio (RRR), underscoring the need to keep domestic liquidity in check despite the country's slowing economic growth.

In a press conference on Monday, BSP Governor Eli Remolona Jr. said adjustments to the RRR remain an option but not a priority at this time.

"I would say it's on the table, but there's no urgency in adjusting it," he said.

When asked if there is a possibility within the year, Remolona said it would depend on the monetary world and "5 percent is pretty low."

On March 28, the BSP trimmed the RRR to 5 percent for universal and commercial banks, 2.5 percent for digital banks, and zero for thrift banks.

The RRR represents the portion of deposits that banks must hold as standby funds rather than lend out, ensuring that financial institutions can meet withdrawal demands during periods of stress.

When Remolona assumed office in 2023, the reserve ratio was at 9.5 percent.

He earlier described RRR reduction as a "neutral" tool that injects liquidity into the financial system and supports lending activities even though interest rate cuts may pressure the peso. 

PNA PHOTO