January 20, 2004
Bank of Japan

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At the Monetary Policy Meeting held today, the Bank of Japan decided to amend the principal terms and conditions for the outright purchases of asset backed securities (seeAttachmentfor the amended text).

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Attachment

Amendment to"Principal Terms and Conditions for the Outright
Purchases of Asset-Backed Securities"

• Paragraph 4. shall be amended as follows.

4. Eligible Securities to be Purchased

(No change)

(1) (No change)

(2) ABSs

(a) (No change)

(b) Ratio of assets related to small and medium-sized enterprises

50% or more ofeither thetotal valueor the total number ofindividual assets in 'specific assets' (i.e. pools of financial assets which constitute original sources for paying principal and interest of ABSs) shall be composed of assets related to small and medium-sized enterprises (i.e. enterpriseseither with capital of less than 1 billion yenor with employees of 999 or less ). 'Assets related to small and medium-sized enterprises' mean (i) financial assets such as receivables whose original creditors are small and medium-sized enterprises and (ii) financial assets such as loans whose debtors are small and medium-sized enterprises.

(C) Creditworthiness of debtors of specific assets

If specific assets include loans whose original creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the loans were transferred to issuers of ABSs.

(3) STSs

(a) (No change)

(b) Ratio of assets related to small and medium-sized enterprises

50% or more ofeither thetotal valueor the total number ofindividual assets in reference portfolios shall be composed of assets related to small and medium-sized enterprises.

(c) Creditworthiness of debtors of reference portfolios

If reference portfolios include loans whose creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the credit risk of loans was transferred to issuers of STSs.

(4) ABCP

(a) (No change)

(b) Ratio of assets related to small and medium-sized enterprises

50% or more ofeither thetotal valueor the total number ofindividual assets in specific assets shall be composed of assets related to small and medium-sized enterprises.

(c) Creditworthiness of debtors of specific assets

If specific assets include loans whose original creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the loans were transferred to issuers of ABCP.

(cd ) Ratings

ABCP shall be rated a-1 by at leasttwoone eligible rating agencyies .

(Supplementary Provision)

These amendments shall become effective on January 20, 2004.