(NAR) VOL. 18 NO. 1/JANUARY - MARCH 2007
“Depository banks under the foreign currency deposit and expanded foreign currency deposit systems shall maintain at all times a hundred percent (100%) cover for their foreign currency liabilities. For purposes of complying with this requirement, the principal offices in the Philippines of the authorized banks and all its branches located therein shall be considered as a single unit. The foreign currency cover shall consist of the following:
1. For banks authorized to operate an FCDU –
a. Foreign currency deposits with the BSP;
b. Foreign currency deposits of short-term maturity, with foreign banks abroad, OBUs and other FCDUs/EFCDUs;
c. Short-term foreign currency loans authorized by the BSP except those classified by the BSP as bad or uncollectible debts;
d. Investments in foreign currency-denominated debt instruments, which are of short-term maturities and are readily marketable;
e. Foreign currency notes and coins on hand;
f. Foreign Currency Checks & Other cash items;
g. Foreign currency-foreign currency swap;
h. Foreign currency interests receivable;
i. Trading Account Securities – Loans (Government Securities Purchased under Resale Agreements – EFCDU/FCDU);
j. DERIVATIVES WITH POSITIVE FAIR VALUE (DERIVATIVES WITH NEGATIVE FAIR VALUE SHALL REQUIRE CORRESPONDING ASSET COVER);
and
k. Such other assets, as may be determined by the Monetary Board as eligible cover.
l. The government securities used as collateral of the borrowing and any margin (in the form of cash or securities) that the lender will collect from the bank anytime the market value of the collateralized securities falls below the amount of the loan shall be considered as eligible asset cover for the 100% cover requirement of said borrowings. Any excess in the value of the securities or cash used as collateral in a repurchase arrangement cannot be used as cover for other FCDU/EFCDU liabilities.”