THE BANGKO SENTRAL ng Pilipinas (BSP) will now require bigger lenders to report their intraday liquidity position as it looks to monitor its supervised institutions and their capacity to shoulder their day-to-day obligations with clients.
In a statement on Wednesday, the central bank said the policy-setting Monetary Board has approved the adoption of the report on intraday liquidity. Universal and commercial banks as well as their subsidiary thrift units and quasi-banks (QBs) will be required to submit the report which will include metrics consistent with international standards, including daily maximum intraday liquidity usage, intraday throughput, gross payments sent and received, and available intraday liquidity position, among others.
Covered lender are required to submit the report by end-June 2021.
“The monitoring of intraday liquidity position provides a tool to gauge the ability of covered banks and QBs to meet their intraday obligations on a timely basis, ultimately contributing to the smooth and efficient functioning of the payment and settlement systems,” the central bank said.
“Moreover, the submission of the report is expected to encourage covered banks/QBs to adopt a systematic and disciplined approach in managing their intraday liquidity. It will also enable the BSP to conduct a detailed analysis of the resilience of the covered banks/QBs to intraday liquidity shocks and monitor how intraday liquidity risk evolves over time,” the central bank added.
Meanwhile, stand-alone thrift banks and QBs, as well as rural banks, are exempt from the required reporting on intraday liquidity due to the lower volume of their payments and settlements.
“Instead, they are expected to maintain an adequate and reliable management information system that is able to measure and monitor selected intraday metrics,” the BSP said.
The guidelines for intraday reporting complete the central bank’s four-phased package of reforms on liquidity standards. Earlier phases were the issuance of guidelines on liquidity risk management; the adoption of the liquidity coverage ratio and the net stable funding ratio for big banks and their subsidiaries; and the imposition of a minimum liquidity ratio for stand-alone thrift and rural banks, respectively.
“The sequencing of these liquidity standards was deliberate and cognizant of domestic conditions and the potential impact on the banking system,” the BSP said. — L.W.T. Noble