Explanation of "Monetary Base Statistics"

Junuary 2004
Bank of Japan
Research and Statistics Department

1. Definition

The monetary base is the "Currency Supplied by the Bank of Japan" and is defined as follows.

Monetary base = Banknotes in Circulation + Coins in Circulation + Current Account Balances (Current Account Deposits in the Bank of Japan)

2. Notice on usage

1) The "Banknotes in Circulation" and "Coins in Circulation" in the monetary base include cash (bank notes and coins) held by financial institutions, while "Cash Currency in Circulation" in the Money Stock Statistics does not. This is because the former is defined as the "Currency Supplied by the Central Bank," while the latter is defined as the "Currency Supplied to the Economy from the Financial Sector as a Whole (including the central bank)" in addition.

2) The definitions of the monetary base

New Basis (April 1981 -): Banknotes in Circulation + Coins in Circulation + Current Account Balances (Current Account Deposits in the Bank of Japan)

Old Basis (- March 1981): Banknotes in Circulation + Coins in Circulation + Reserve Balances

* In order to indicate "Currency Supplied by the Bank of Japan" more precisely, "Reserve Balances" has been replaced by "Current Account Balances (Current Account Deposits in the Bank of Japan)" which includes deposits by institutions not subject to the Reserve Requirement System (tanshi companies <money market brokers-cum-dealers>, securities companies etc.)

3) Method of adjusting the effect of changes in the reserve requirement rate

Reserve balances (reserve requirement rate change adjusted) = Reserve balances of the month * (Average effective reserve requirement rate of base period / Rate of comparison period)

- Base period: the following month of the month when the latest reserve requirement rate change occurred. (The current base period is November 1991)

- Comparison period: the months when the latest reserve requirement rate

change occurred--the same month

From the base period and onward---base period

other months---the previous month of the month when the reserve requirement rates is changed.

- Average effective reserve requirement rate: Required reserve balances / Liabilities subject to reserve requirement

4) Notes on usage

Regular revision

Every February: the seasonally adjusted data are revised from the beginning of the data.

Irregular revision

If an error is discovered in the reported data or in the compiling process, the data are revised immediately. In principle, the data are revised retroactively, at most for the past three years, and are announced on the closest release date of the from when the data correction is finished. However, in cases when the revision is below 0.1% of amounts outstanding of Monetary Base, the data are revised at the time of the next revision.