MANILA (Bloomberg): The Philippine central bank will temporarily allow banks to set aside lower reserves for sustainable bond sales and expand their lending capability, part of broader initiatives to combat climate change.
The monetary board has approved a gradual reduction in the reserve requirement rate for green, social, sustainability, and other sustainable bonds issued by banks to zero from 3% at present, the Bangko Sentral ng Pilipinas said in a statement Saturday.
It also approved an additional 15% single borrower limit on loans to finance sustainable projects, including transition to decarbonization.
The two measures will be available to banks for two years and may be reviewed as needed.
"We will identify and create appropriate incentives that are within our mandates, empowering the banking system to steer capital flows toward growing green or sustainable investments,” central bank Governor Eli Remolona said in the statement.
The sustainability bond reserve requirement will be cut by 2 percentage points in the first year after the change takes effect, followed by another percentage point in the second year, the central bank said.
The move "does not constitute a change in the monetary policy stance but is envisioned solely to be a tool to promote sustainable finance,” it said.
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