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Acceptance of US Treasury Securities as Collateral

(For immediate release)

October 27, 1999
Bank of Japan

The Monetary Policy Meeting of the Policy Board has today decided to accept US Treasury securities (Treasury bills, Treasury notes, and Treasury bonds) as eligible collateral for the Bank's loans on bills, from December 1, 1999 to January 31, 2000, as a temporary measure to cope with the Year 2000 problem.

The Bank will later notify details to related financial institutions.

Appendix

Scheme to Accept US Treasury Securities as BOJ's Eligible Collateral

  1. BOJ will open a securities custody account with the Federal Reserve Bank of New York (FRBNY).
  2. Financial institutions transfer their US Treasury securities to BOJ's account by Fedwire.
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  1. (1) Financial institutions' head offices or branches in NY instruct their securities intermediaries to transfer specified US Treasury securities to BOJ's securities custody account.
  2. (2) Securities intermediaries instruct FRBNY to transfer specified US Treasury securities to BOJ's securities custody account.
  3. (3) FRBNY transfers US Treasury securities from the accounts of securities intermediaries to BOJ's securities custody account.
  4. (4) BOJ maintains a sub-account for each financial institution.
  1. BOJ will calculate the collateral value of US Treasury securities on a current yen-basis (and multiplied by a certain percentage) and add it to other collateral value and, at its discretion, provide loans to financial institutions up to the equivalent of collateral value.
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