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Amendment to "Guidelines on Eligible Collateral" and "Principal Terms and Conditions for the Purchase of CP with Repurchase Agreements"

March 16, 2005
Bank of Japan

At the Monetary Policy Meeting held today, given that more market participants are likely to shift from using paper CP to using dematerialized CP, the Policy Board of the Bank of Japan decided to accept yen-denominated dematerialized CP issued by foreign corporations with domestic corporation guarantees as eligible collateral for the Bank's provision of credit and to include the CP in the range of eligible assets for CP purchase operations with repurchase agreements.(See attachments 1 and 2 for the amended "Guidelines on Eligible Collateral" and "Principal Terms and Conditions for the Purchase of CP with Repurchase Agreements.")


Attachment 1

Amendment to "Guidelines on Eligible Collateral"

  • Paragraph 2. (3) shall be amended as follows.

(3) Utilizing Market Information

To utilize market mechanism, the Bank shall make effective use of market information, such as ratings by rating agencies in assessing the eligibility of collateral, market prices in calculating collateral prices, and public information in evaluating the creditworthiness of corporate bonds, dematerialized commercial paper issued by domestic corporations, dematerialized commercial paper issued by foreign corporations with guarantees, bills drawn by companies, commercial paper (excluding asset-backed commercial paper), loans on deeds to companies (hereinafter collectively referred to as "corporate debt obligations"), asset-backed securities, dematerialized asset-backed commercial paper, and asset-backed commercial paper.

  • Table 1 shall be amended as follows.

Table 1

Categories of Collateral and Collateral Prices

  • Table 2 shall be amended as follows.

Table 2

Eligibility Standards for Each Category of Collateral

(Supplementary Provision)

These amendments shall become effective on March 16, 2005.


Attachment 2

Amendment to "Principal Terms and Conditions for the Purchase of CP with Repurchase Agreements"

  • Paragraph 1. shall be amended as follows.

1. Purpose

These Principal Terms and Conditions prescribe the principles for the Bank of Japan's purchase of CP (which includes commercial paper, dematerialized commercial paper issued by domestic corporations, dematerialized commercial paper issued by foreign corporations with guarantees, and dematerialized asset-backed commercial paper) with repurchase agreements with the aim of facilitating money market operations.

  • Paragraph 4. shall be amended as follows.

4. CP to be Purchased

Commercial paper, dematerialized commercial paper issued by domestic corporations, dematerialized commercial paper issued by foreign corporations with guarantees, and dematerialized asset-backed commercial paper accepted as eligible collateral by the Bank under "Guidelines on Eligible Collateral" (Policy Board Decision on October 13, 2000).

(Supplementary Provision)

These amendments shall become effective on March 16, 2005.