Outline of the Bank of Japan
Contents
The Bank of Japan is the central bank of Japan. It is a juridical person established based on the Bank of Japan Act (hereafter the Act), and is not a government agency or a private corporation.
The Act sets the Bank's objectives "to issue banknotes and to carry out currency and monetary control" and "to ensure smooth settlement of funds among banks and other financial institutions, thereby contributing to the maintenance of stability of the financial system."
The Act also stipulates the Bank's principle of currency and monetary control as follows: "currency and monetary control by the Bank of Japan shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy."
The Bank's business operations to achieve the above objectives are described in Policy and Operations and The Bank of Japan's Strategic Priorities.
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1. The Policy Board
The Policy Board is established as the Bank's highest decision-making body. The Board determines the guideline for currency and monetary control, sets the basic principles for carrying out the Bank's operations, and oversees the fulfillment of the duties of Bank executives, excluding Auditors and Counsellors.
2. Bank Executives
Bank executives are members of the Policy Board (including the Governor and the Deputy Governors), Auditors, Executive Directors, and Counsellors.1
1 The number of executive posts given to the Bank executives is as follows: the Governor (one), the Deputy Governors (two), the other members of the Policy Board (six), Auditors (three or less), Executive Directors (six or less), and Counsellors (a few).
3. Departments, Branches, Local Offices in Japan, and Overseas Representative Offices
The Bank is capitalized at 100 million yen in accordance with the Act. About 55 percent of the capital is subscribed by the government.2
2 The Act states that "of the amount of stated capital set forth in the preceding paragraph, the amount of contribution by the government shall be no less than fifty-five million yen."
The Act does not grant holders of subscription certificates the right to participate in the Bank's management, and, in the case of liquidation, only gives them the right to request distribution of remaining assets up to the sum of the paid-up capital and, if any, the special reserve. Dividend payments on paid-up capital are limited to 5 percent or below in each fiscal period.
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The Bank of Japan was established under the Bank of Japan Act (promulgated in June 1882) and began operating on October 10, 1882, as the nation's central bank. The Bank was reorganized on May 1, 1942 in conformity with the Bank of Japan Act (hereafter the Act of 1942), promulgated in February 1942. The Act of 1942 strongly reflected the wartime situation: for example, Article 1 stated the objectives of the Bank as "the regulation of the currency, control and facilitation of credit and finance, and the maintenance and fostering of the credit system, pursuant to national policy, in order that the general economic activities of the nation might adequately be enhanced." The Act of 1942 was amended several times after World War II. Such amendments included the establishment of the Policy Board as the Bank's highest decision-making body in June 1949.
The Act of 1942 was revised completely in June 1997 under the two principles of "independence" and "transparency." The revised act (the Act) came into effect on April 1, 1998.
