The Monetary Board approved the adoption of the report on intraday liquidity to facilitate monitoring of the BSP-supervised institutions’ intraday liquidity position.
The monitoring of intraday liquidity position provides a tool to gauge the ability of covered banks and quasi banks (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 report on intraday liquidity will be applied to universal and commercial banks (UBs/KBs), and their subsidiary thrift banks/QBs.
The report requires the presentation of intraday liquidity metrics consistent with those proposed under international standards such as daily maximum intraday liquidity usage, intraday throughput, gross payments sent and received, and available intraday liquidity position, among other metrics.
Meanwhile, stand-alone thrift banks/QBs and all rural/cooperative banks will not be required to submit the report on intraday liquidity in recognition of the lower volume of payments and settlements entered into by these financial institutions.
Instead, they are expected to maintain an adequate and reliable management information system that is able to measure and monitor selected intraday metrics.
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.
Covered banks/QBs are required to submit the report by end-June 2021.
The guidelines complete the BSP’s four-phased package of reforms on liquidity standards.
These include the issuance of Guidelines on Liquidity Risk Management (first phase), the adoption of Liquidity Coverage Ratio and the Net Stable Funding Ratio for universal and commercial banks (UBs/KBs) and their subsidiary banks/QBs (second phase) as well as the Minimum Liquidity Ratio (MLR) for stand-alone thrift, rural and cooperative banks (third phase).
The sequencing of these liquidity standards was deliberate and cognizant of domestic conditions and the potential impact on the banking system.