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Principal Terms and Conditions Pertaining to the Purchase of Bills

(For immediate release)

April 27, 2000
Bank of Japan

1. Purpose

Unless otherwise stipulated, these Terms and Conditions govern the Bank of Japan's purchase of bills issued by financial institutions against collateral such as bills and securities, with the aim of facilitating money market operations.

2. Location of Operations

At the Bank of Japan's head office (Operations Department).

3. Eligible Counterparties

Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Law, Law No.89, 1997), domestic and foreign securities companies (Article 10, Paragraph 1, Clause 2 of the Bank of Japan Law Enforcement Order <Order No.385 of 1997> and Article 10, Paragraph 1, Clause 4 of the same Order, respectively), securities finance companies (Article 10, Paragraph 1, Clause 3 of the Order), and tanshi companies (Article 10, Paragraph 1, Clause 5 of the Order).

4. Bills to be Purchased

The Bank shall purchase bills issued by financial institutions whose drawers, drawees, and payees are the financial institutions themselves.Drawees must have completed acceptance of the bills, and the maturity date of eligible bills must be within three months starting from the next date of purchase.

5. Purchasing Method

Bills shall be purchased through a discount method.The rate of discount is determined by the conventional method in competitive auction.

6. Purchase Dates and Amount of Bills to be Purchased

Taking into account the situation in financial markets, the Bank shall determine necessary details, including purchase dates, amount of bills to be purchased, and counterparties every time it conducts the operations.

7. Collateral

  1. (1) Bills
    The Bank shall accept, as collateral from eligible counterparties, bills (including bills denominated in foreign currencies) whose drawees are of adequate creditworthiness and which do not maintain current accounts with the Bank.The maturity date must be within one year starting from the next date of purchase.
  2. (2) Securities
    The Bank shall accept, as collateral from eligible counterparties, Japanese government bonds, treasury bills, financing bills, Japanese government-guaranteed bonds, and interest-bearing bank debentures that the Bank considers eligible.

8. Collateral Value

The value of collateral prescribed under paragraph 7 above shall be calculated as follows:

  1. (1) Bills
    Collateral value shall be set at face value.In the case of bills denominated in foreign currencies, collateral value shall be set within 75% of the face value converted into yen.
  2. (2) Securities
    Collateral value of securities shall be set according to the table below.
Table : Collateral value of securities shall be set according to the table below.
Type of Securities Collateral Value
(Proportion of face value)
(a) Interest-bearing Japanese government bonds
(maturity within 10 years)
Within 100/120
(b) Interest-bearing Japanese government bonds
(maturity over 10 years and within 30 years)
Within 100/130
(c) Discount Japanese government bonds Within 100/140
(d) Treasury bills and financing bills Within 100/110
(e) Japanese government-guaranteed bonds Within 100/130
(f) Interest-bearing bank debentures Within 100/130

(Supplementary Provision)

These Terms and Conditions shall become effective on April 27, 2000.