The Philippines is planning a four-fold increase in bank deposit insurance to P1 million as part of measures to ensure stability in the financial system amid the global credit crisis, a senior official said on Tuesday.

The increase, which needs to be passed by Congress, has been approved by the cabinet, Executive Secretary Eduardo Ermita told reporters.

"The president (Gloria Macapagal Arroyo) stressed that it is better to have the increase now while we still don't need it," Ermita said.

A bill to increase bank deposit insurance to P500,000 from P250,000 is now pending in Congress, but the cabinet wants to further raise the insurance cover.

"It is really just so that there is a feeling of security among depositors in the face of what is happening now worldwide," presidential spokesman Jesus Dureza later told reporters.

In an interview with ABS-CBN News, central bank governor Amando Tetangco said, "We support the proposed increase in the deposit insurance coverage. This and other related reforms should be done in the context of an overall plan to strengthen the PDIC."

Philippine banks are shielded from the global credit crisis, with only about 2 percent of the industry's total assets exposed to structured products and with no bank having a direct link to subprime mortgages, the central bank has said.

Although the central bank maintains that domestic liquidity conditions remained appropriate, it approved measures and is studying other policy moves that would inject more cash into the financial system to dampen fears of a liquidity crunch.

On Monday, central bank Governor Amando Tetangco said monetary authorities had the flexibility to reduce its key policy rates and were studying the possibility of a cut in banks' reserve requirements.

A one-percentage-point cut in reserve requirements would free up to P30 billion in liquidity.

On Friday, the central bank said it had opened a short-term dollar repurchase facility and enhanced an existing peso repurchase window.

It also approved a dollar-denominated deposit window for banks with excess cash to prevent foreign exchange outflows. The moves were aimed at creating liquidity amid tight credit conditions around the world.