Extension of the Effectivity of the Temporary Reduction in the Minimum Liquidity Ratio in response to COVID-19

BANGKO SeNrneL NE PILIPINAS OFFICE OF THE GOVERNOR MEMORANDUM NO. M-2020.085 To All Stand-Alone Thrift Banks, Rural Banks and Cooperative Banks Subject Extension of the Effectivity of the Temporary Reduction in the Minimum Liquidity Ratio in response to COVID-19' Pursuant to Monetary Board Resolution No. 1500 dated 1.9 November 202O, the effectivity of the temporary reduction in the minimum liquidity ratio (MLR) for stand-alone thrift banks, rural banks and cooperative banks, as implemented under BSP Memorandum No. M-2020-020, is hereby extended for an additional one year. The effectivity of the regulatory relief measure is being extended in recognition of the continuing demand for liquidity faced by banks due to the COVID-19 pandemic. The extension also aims to provide covered banks with sustained capacity to support the economy and expand their lending activities During this period, stand-alone thrift banks, rural banks, and cooperative banks may draw on their stock of liquid assets to meet tiquidity demands to respond to the current circumstances, remaining cognizant of the MLR of 16 percent (L6o/ol. Following existing arrangements, a bank that has recorded a shortfall in the stock of eligible liquid assets on three banking days within any two-week rolling calendar period, thereby causing the MLR to fall below 1.5 percent (L5%1, must notify the BSP of such breach on the banking day immediately following the occurrence of the third liquidity shortfall. The reduction in the MLR and the arrangements set forth in this memorandum shall be effective until 31 December 202L, unless otherwise revoked by the BSP, ( c \. BENJAMIN E. DIOKNO Governor Ol December 2020 A. Mabini St., Malate 1004 Manila, Philippines * (63217O8-77O1* www.bsp.gov.ph* [email protected]