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Outline of Complementary Lending Facility

As of October 13, 2015
Bank of Japan
Financial System and Bank Examination Department

This document is an outline of the complementary lending facility, through which the Bank of Japan extends loans based on the "Principal Terms and Conditions for Complementary Lending Facility." Please note that the following information may change in the future.

I.  Counterparties

Counterparties -- financial institutions, financial instruments firms that conduct the type I financial instruments business, securities finance companies, or tanshi companies -- shall be those that apply for access to the facility and are deemed sufficiently creditworthy by the Bank1.

In principle, the Bank reviews these approvals annually.

Note 1: As part of its measures regarding the financial system after the full removal of the blanket guarantee of deposits, in 2005 the Bank decided to introduce a notice period that would serve as a warning prior to cancellation of its approval of counterparties' access to the complementary lending facility.

II.  Location of Operations

Each counterparty shall specify in advance as the location of its operations one business office from among the Bank's Head Office (Operations Department) and its branches.

III.  Duration of Loans

Overnight.

IV.  Loan Rate

The interest rate applied shall be the basic loan rate2.

Note 2: In the event that counterparties use the facility for more than five days on a cumulative-business-day basis within a single reserve maintenance period, the interest rate applied for the sixth business day onward shall be the basic loan rate plus 2%. As a temporary measure for the time being, however, the basic loan rate -- without the additional 2% -- is currently being applied for all business days regardless of the number of days for which the facility is used.

V.  Collateral

The Bank shall accept eligible collateral from counterparties in advance.

VI.  Amount of Loans

The amount of loans shall be decided in accordance with the requests by counterparties within the value of eligible collateral they submit to the Bank.

VII.  Access to the Facility

The Bank shall extend loans at the requests of counterparties, provided it receives such requests by the deadline it has determined.

Loans shall be provided in the form of electronic lending.

Loans shall be extended through real-time processing of funds. Counterparties shall repay loans to the Bank without undue delay following the beginning of BOJ-NET core operating hours on the business day after disbursement.