FCDU Liquid Asset Cover Update

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BSP CIRCULAR LETTER: FCDU Liquid Asset Cover Update

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Title Source: Supreme Court: FCDU Liquid Asset Cover Update

Law: Bsp Circular Letter

Decision Date: Mar 30, 2000

The Monetary Board's March 30, 2000 resolution allows the inclusion of "Due from BSP-FCDU" accounts with a maturity of one year or less as eligible liquid asset cover for foreign exchange liabilities in the Foreign Currency Deposit Units (FCDU).

Law Summary

Eligible Liquid Asset Cover Expansion

The Monetary Board Resolution No. 370, dated March 10, 2000, introduces an additional asset category eligible as liquid asset cover.
Specifically, the "Due from BSP-FCDU" account with a maturity period of one (1) year or less is included.

Conditions for Eligible Assets

The included "Due from BSP-FCDU" deposits or placements:
- Must have a maturity of one year or less.
- Must not be encumbered (i.e., not pledged as security or restricted).
- Must not be currently utilized for any other purpose.

Purpose

This measure aims to broaden the range of liquid assets that FCDUs may use to meet their foreign exchange liabilities coverage, enhancing liquidity management.

Binding Instruction and Implementation

The Circular Letter formally instructs FCDUs to adhere to these updated provisions.
It was officially adopted on March 30, 2000, and signed by BSP Governor Rafael B. Buenaventura.

Legal Authority

The Circular derives its authority from the Monetary Board Resolution No. 370 dated March 10, 2000, which governs BSP policy on foreign exchange liability coverage for FCDUs.

END