Question & AnswerQ&A (BSP MEMORANDUM)
The liquidity reserve ratio for peso-denominated common trust funds is ten percent (10%) plus an additional liquidity reserve of six percent (6%) effective October 15, 1997, which subsequently reduces to five percent (5%) effective November 15, 1997.
No, the liquidity reserve requirement must be held in the form of short-term market-yielding government securities purchased directly from the BSP-Treasury Department.
All financial intermediaries authorized to engage in trust and other fiduciary business must maintain a ten percent (10%) reserve against Trust and Other Fiduciary Accounts (TOFA) a Others, except for specified account types listed in the memorandum.
The following accounts are exempted: accounts held under administration; bond issues under deed of trust or mortgage; custodianship and safekeeping; depository/reorganization; employees' benefit plans under trust; escrow; personal trust (testamentary or living trust); executorship; guardianship; life insurance trust; and pre-need plans (institutional/individual).
A six percent (6%) liquidity reserve effective October 15, 1997, subsequently reduced to five percent (5%) effective November 15, 1997 must be held on top of the regular reserve requirement.
The liquidity reserve must be held in the form of short-term market-yielding government securities purchased directly from the BSP-Treasury Department.
The amendments took effect on October 1, 1997, with subsequent changes to the liquidity reserve percentages effective October 15 and November 15, 1997 respectively.
The liquidity reserve ensures that financial intermediaries maintain sufficient liquid assets to meet potential withdrawal demands and enhance financial stability in trust and fiduciary operations.
The liquidity reserves should be held in the form of short-term market-yielding government securities purchased directly from the BSP-Treasury Department.