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Revision of the selection procedure for counterparties in Bill Purchasing Operations

January 16, 2002
Bank of Japan

At the Monetary Policy Meeting held today, The Bank of Japan ("The Bank"), with a view to facilitating money market operations, decided to revise the selection procedure for counterparties in Bill Purchasing Operations ("BPO") as follows.

1. Year-round acceptance of applications for counterparties in BPO conducted at the Bank's all offices ("All offices BPO").

Presently, counterparties in All offices BPO are selected once a year. The Bank decided to change this, and it will accept applications any time and will add any institution satisfying a set of criteria to the list of eligible counterparties on an ongoing basis. The Bank will release the details of this procedure in early February and begin to receive applications.

As one of the criteria, The Bank is planning to require that applying institutions maintain a certain level of collateral at the Bank. Specifically, it is envisaged that the institutions would maintain more than 1 billion yen (subtracting the amount equal to the security for treasury fund operations) of collateral on average at The Bank in previous month.

As for the selected counterparties, The Bank will review their willingness and eligibility to remain counterparties once a year.

2. Revision of criteria for selecting counterparties in BPO conducted at the Bank's head office ("Head office BPO").

The Bank revised the criteria for selecting counterparties in Head office BPO as follows. The revised criteria will be applicable from the next selection scheduled this spring.

  1. (a) The Bank added "successful bids in All offices BPO" to the present criteria (" successful bids in Head office BPO " and "the average amount of eligible collateral maintained at the Bank").
  2. (b) Owing to (a), applicants for counterparties of Head office BPO will have to be counterparties of All offices BPO in advance.