Philippine Central Bank Gives Banks Temporary Relief on Government Bond Paper Losses Through December 2026

According to Rappler on June 26, the Bangko Sentral ng Pilipinas (BSP) announced Memorandum No. M-2026-027, allowing banks to temporarily exclude unrealized losses on peso government securities from regulatory capital calculations. The relief, in effect from April 1 to December 31, 2026, aims to cushion the impact of market volatility triggered by Middle East tensions that pushed bond yields higher and reduced asset values.

Former BSP deputy governor Diwa Guinigundo warned that the temporary relief may introduce moral hazard, raising concerns that banks could take on more risks if they expect regulators to cushion them from future market shocks. Moody's Ratings called the measure "credit negative," noting that Philippine banks hold about 30% of their assets in government securities, with roughly 40% classified as fair-value-through-other-comprehensive-income (FVOCI) and thus exposed to mark-to-market treatment.