A Proposal for the Extension of Operating Hours of BOJ-NET Funds Transfers 1
March 27, 1998
Bank of Japan
The Bank of Japan proposes to extend the operating hours of the funds transfer system of the Bank of Japan Financial Network System (BOJ-NET) by the end of the year 2000. Under the proposal, the operating hours will be extended by two hours from the current eight hours (from 9:00 a.m. to 5:00 p.m., Tokyo time) to ten hours (from 9:00 a.m. to 7:00 p.m.).2 On-line participants with current accounts at the Bank's head office which apply for the use of extended hours will be able to input funds transfer instructions and have access to intraday overdrafts during these two hours to the extent of their collateral deposited at 5:00 p.m.
The purpose of the extension is to help financial institutions reduce settlement risk involved in foreign exchange transactions, which is analyzed in a report, Settlement Risk in Foreign Exchange Transactions, prepared under the auspices of the Committee on Payment and Settlement Systems of the G-10 central banks.3 The report urges that actions should be taken by individual banks, industry groups, and central banks to reduce foreign exchange settlement risk. To facilitate private sector initiatives, the Bank of Japan plans to provide longer operating hours for its funds transfer service, allowing overlapping of operating hours with other RTGS systems in different time zones.4 The extension is proposed to be implemented by the end of the year 2000 when the BOJ-NET is restructured to an RTGS system by abolishing net settlement.5
The Bank of Japan hereby announces that it seeks comment on the proposed extension from BOJ account holders, due on May 29th, 1998. The Bank will give due consideration to the comments received, and will make a final decision on the extension of operating hours in due course.
1 This is a summary excerpted and translated from an original public consultation paper in Japanese. The Japanese original is available from the Financial and Payment System Department, Bank of Japan (tel: +81-3-3279-1111; fax: +81-3-5255-6752).
2 From a technical viewpoint, the system architecture would permit the operating hours to be extended up to 8:00 p.m.
3See Settlement Risk in Foreign Exchange Transactions, Bank for International Settlements, March 1996.
4For example, the operating hours of the BOJ-NET will overlap by four and a half hours with Fedwire in the United States, and four hours with TARGET in EMU countries.
5 For details, see "The Framework for Restructuring the BOJ-NET Funds Transfer System," Bank of Japan Quarterly Bulletin, August 1997.