Skip to main content

Funding Levels for the New Accounts in the BOJ-NET

December 2006
Kei Imakubo*1
James J. McAndrews*2

Click on wp06e21.pdf to download the full text.

Abstract

The Bank of Japan decided to implement the next-generation RTGS project of the BOJ-NET Funds Transfer System. Under the project, the new system will have liquidity-saving features and will incorporate large-value payments that are currently handled by two private-sector designated-time net settlement systems, the Foreign Exchange Yen Clearing System and the Zengin System. We analyze characteristics of the optimal funding levels under the new features using simulation analysis. We find that the optimal funding levels can be described with the total balances in the system, the distribution of the total balances across participants, and the timing of funding.

Keywords:
queue-augmented RTGS, simulation analysis, economies of scale, optimization problem.

The paper is a revised version of the one presented at the Payment and Settlement Simulation Seminar hosted by the Bank of Finland in 2005. The authors are deeply grateful to Masayuki Mizuno for his encouragement and fruitful advice as well as other colleagues in the Bank of Japan. The authors also thank to seminar participants at the Bank of Finland for their helpful comments and suggestions. Any remaining errors should be solely attributed to the authors. The views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan, the Federal Reserve Bank of New York, or the Federal Reserve System.

  • *1 Payment and Settlement Systems Department, Bank of Japan.
    E-mail: kei.imakubo@boj.or.jp
  • *2 Payments System Studies, Federal Reserve Bank of New York.
    E-mail: jamie.mcandrews@ny.frb.org

Notice

Papers in the Bank of Japan Working Paper Series are circulated in order to stimulate discussion and comments. Views expressed are those of authors and do not necessarily reflect those of the Bank.

If you have any comment or question on the working paper series, please contact each author.

When making a copy or reproduction of the content for commercial purposes, please contact the Public Relations Department (webmaster@info.boj.or.jp) at the Bank in advance to request permission. When making a copy or reproduction, the source, Bank of Japan Working Paper Series, should explicitly be credited.