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- Oct. 4, 2022
May 18, 2001
Bank of Japan
The Bank of Japan ("the Bank"), with a view to facilitating money market operations, has decided as follows.
At the Monetary Policy Meeting held today, the Bank decided to revise the"Principal Terms and Conditions Pertaining to the Purchase of Bills". Effective today, the Bank extends the maturity date for bills purchased in such operations from 3 months or less to 6 months or less.
(For the revised text of the"Principal Terms and Conditions Pertaining to the Purchase of Bills", see Attachment)
Many market participants have applied to become eligible counterparties in Bill Purchasing Operations at the Bank's head office in response to the Bank's earlier invitation. Meanwhile, the Bank believes that a larger number of eligible counterparties would facilitate its supply of funds to the market. The Bank, therefore, decided to increase the number of eligible counterparties in Bill Purchasing Operations at the Bank's head office from the current 30 to 40. In making this decision, the Bank also decided to extend the invitation until the end of this month.
Currently, in competitive yield auctions for money market operations, the Bank receives bids on every 0.01% (two decimal places) except for outright purchases of JGBs and TBs/FBs. By late July this year, the Bank will start receiving bids on every 0.001% (three decimal places) for every competitive yield auction carried out by the Bank.
Currently, 10-year and 20-year government bonds are accepted in the Bank's outright purchases of JGBs. The Bank decided to accept 2, 4, 5 and 6-year government bonds in outright purchases of JGBs beginning June this year.
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
threesix months starting from the next date of purchase.
This revision shall become effective on May 18, 2001.
These Terms and Conditions govern the Bank of Japan's purchase of bills issued by financial institutions against pooled eligible collateral, with the aim of facilitating money market operations.
At the Bank of Japan's head office (Operations Department) or its branch offices.
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, excluding the Resolution and Collection Corporation and the Kii Deposits Management Bank), 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).
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 six months starting from the next date of purchase.
Bills shall be purchased through a discount method. The rate of discount is determined by the conventional method in competitive auction.
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.