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Introduction of the Securities Lending Facility to Provide the Markets with a Secondary Source of Japanese Government Securities

April 9, 2004
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided, by unanimous vote, to introduce a facility which provides the markets with Japanese government securities (JGSs) held by the Bank as a temporary and secondary source (the so-called securities lending). 1

In government securities markets, liquidity may decline occasionally when market participants experience difficulties in securing specific issues or face uncertainties over their availability. It is a prerequisite for market participants to make every effort to maintain market liquidity, and with the efforts on the part of market participants, this facility as a temporary and secondary source of JGSs to the markets would have positive effects in preventing decline in market liquidity.

The Bank expects this facility to contribute to enhancing liquidity and maintaining the smooth functioning of JGS markets.

  1. For details, see "Establishment of Principal Terms and Conditions for the Sale of Japanese Government Securities with Repurchase Agreements to Provide the Markets with a Secondary Source of Japanese Government Securities."