Guidelines on Liquidity Risk Management

CIRCULAR NO. 545 Series of 2006

Subject:  Guidelines on Liquidity Risk Management

The Monetary Board in its Resolution No. 1082 dated 31 August 2006 approved the adoption of the attached guidelines on liquidity risk management to ensure that financial institutions have the sufficient knowledge and skills necessary to understand and effectively manage liquidity risk.

The guidelines set forth the expectations of the Bangko Sentral ng Pilipinas (BSP) with respect to the management of liquidity risk and are intended to provide more consistency in how the risk-focused supervision function is applied to this risk.  Financial institutions are expected to have an integrated approach to risk management to identify, measure, monitor and control risks.  Liquidity risk should be reviewed together with other risks to determine overall risk profile.

These guidelines are intended for general application; specific application will depend on the size and sophistication of a particular financial institution and the nature and complexity of its activities.

This Circular shall take effect fifteen (15) days after its publication either in the Official Gazette or in a newspaper of general circulation.

FOR THE MONETARY BOARD:

ARMANDO L. SURATOS Officer-In-Charge