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The Bank of Japan Financial Network System (BOJ-NET) supports two separate services: one for electronic transfer of funds (BOJ-NET funds transfer system), and one for electronic transfer of registered and book-entry Japanese government securities (BOJ-NET JGS transfer system).

The BOJ-NET funds transfer system is an on-line system introduced in October 1988 for the electronic transfer of funds across the current accounts at the Bank of Japan.It supports both "real-time settlement" and "designated-time settlement," either of which participants (i.e., BOJ account holders) can choose for their funds transfers.¹ In the real-time settlement mode, payment instructions are settled continuously on a transaction-by-transaction basis (RTGS basis) during operating hours (9 a.m. to 5 p.m.) provided that a sending participant has sufficient covering funds (no intraday overdraft is allowed). In the designated-time settlement mode, participants send payment instructions selecting one of the four designated times (9 a.m., 1 p.m., 3 p.m., and 5 p.m.) for settlement; the payment instructions sent are netted out on a multilateral basis at each settlement time designated by participants; and the resulting net positions are credited and debited on their BOJ accounts at each designated settlement time. Final settlement of funds transfers thus occurs on a net basis four times duringthe business day.

Although an RTGS facility is already available in the BOJ-NET funds transfer system, almost all transactions are currently settled through the designated-time settlement mode (Table 2 for Box 1). In order to address the over-reliance on designated-time settlement from the viewpoint of reducing systemic risk, the Bank has concluded that the BOJ-NET funds transfer system needs to be restructured by abolishing designated-time settlement to make RTGS the only settlement mode.

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1. The term "participants" is used here to include both " on-line account holders" who send payment instructions via BOJ-NET on an on-line basis and " non on-line account holders" who send their instructions on a paper basis.

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Table 1 for Box 1
Summary Information on the BOJ-NET Funds Transfer System

Number of participants (end of March 1997)	714
__Of which, on-line participants	426
Daily average transaction volume (1996)	15,307
Daily average transaction value (1996)	157.4 trillion yen

Table 2 for Box 1
Share of Transactions Settled by RTGS and Designated-Time Settlement

Percent, daily average in March 1997

	RTGS	Designated-time settlement
			9 a.m.	1 p.m.	3 p.m.	5 p.m.
Volume	0.8	99.2	0.8	49.2	44.6	4.7
Value	0.1	99.9	0.5	72.9	21.7	4.9