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Home > Announcements > Releases 1999 > Basic Policy on the Eligibility as Collateral of Asset-Backed Securities and Debt Obligations Issued by Financial Institutions that Maintain Current Accounts with BOJ
September 21, 1999
Bank of Japan
The Monetary Policy Meeting of the Policy Board of the Bank of Japan has today decided basic policy on the eligibility as collateral and as instruments to be discounted or purchased of asset-backed securities and debt obligations issued by financial institutions that maintain current accounts with BOJ. The text of the basic policy is described in the attached.
1. The Bank of Japan shall accept eligible asset-backed securities as collateral for the Bank's credit. However, the Bank shall, for the time being, accept such securities as collateral only for "bill purchasing operations utilizing corporate bonds and loans on deeds." The Bank shall, following decision by the Policy Board, announce further details when ready.
2. Debt obligations described below, that are issued by financial institutions maintaining current accounts with the Bank (hereinafter referred to as "counterpart financial institutions"), shall be excluded from the Bank's eligible collateral and instruments to be discounted or purchased in the Bank's money market operations so that the Bank's judgment on any particular financial institution's creditworthiness shall not be disclosed and such debt obligations taken as collateral or obtained in money market operations shall not be redeemed by proceeds from the Bank's credit itself. Notwithstanding the preceding, debt obligations such as master bills (issued by counterpart financial institutions and purchased by the Bank in bill purchase operations) and other similar instruments against which eligible collateral is positioned in a specified way, as well as bills endorsed by counterpart financial institutions, shall remain eligible.
3. The Bank will continue examining the eligibility of bills (excluding CP), CP, bonds, loans on deeds, and other debt obligations that are issued or guaranteed by affiliates (including parent companies and subsidiaries) of counterpart financial institutions and come to a decision around this time next year.