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Principal Terms and Conditions for Complementary Lending Facility

February 28, 2001

Revision:June 28, 2001
September 18, 2002
April 11, 2006
September 19, 2007
May 22, 2009
February 18, 2014
August 7, 2015
January 31, 2017

1. Purpose

These Terms and Conditions prescribe the principles for a standby lending facility through which the Bank of Japan extends loans at the requests of counterparties with the conditions prespecified by the Bank, with the aim of facilitating money market operations and ensuring the smooth functioning and stability of financial markets.

2. Counterparties

  1. (1) Counterparties shall, pursuant to the Bank's relevant rules, be approved as eligible among financial institutions, etc. (as defined in Article 37, Paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) satisfying the criteria listed below.
    1. (a) To have a current account at the Bank.
    2. (b) To be deemed sufficiently creditworthy in light of its capital condition and other relevant information obtained through the Bank's on-site examinations and so forth.
  2. (2) In principle, the Bank shall review counterparties annually.

3. Location of Operations

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

4. Duration of Loans

Overnight.

5. Loan Rate

  1. (1) The interest rate applied shall be the basic loan rate, with the exception that the basic loan rate plus 2% shall be applied to counterparties who have used on a cumulative-business-day basis the facility longer than the maximum number of days stipulated in (2) during one reserve maintenance period (one month as defined in Article 7, Paragraph 3 of the Law Concerning Reserve Deposit Requirement System, Law No. 135 of 1957).
  2. (2) The maximum number of days for which counterparties can use the facility at the basic loan rate is 5, with the exception that, when deemed necessary in conducting money market operations, the Bank can raise the maximum number of days to more than 5, but within the limit of half the number of business days during the reserve maintenance period. In this case, the Bank shall announce the new maximum number of days accordingly.

6. Amount of Loans

The amount of loans shall be decided in accordance with the requests by counterparties; provided that the amount shall not exceed the value of collateral submitted by the counterparty to the Bank pursuant to item 7 of these terms and conditions.

7. Collateral

  1. (1) The Bank shall accept eligible collateral from counterparties in advance.
  2. (2) "Guidelines on Eligible Collateral" (Policy Board Decision on October 13, 2000) and "Collateral Guidelines on Eligible Foreign Bonds" (Policy Board Decision on May 22, 2009) shall apply to the collateral for the loans.

8. Access to the Facility

  1. (1) The Bank shall extend loans at the requests of counterparties.
  2. (2) Loans shall be provided in the form of electronic lending.

9. Exception

If the Bank specifically deems it necessary in order to conduct money market operations smoothly, it can make exceptions to the terms and conditions stipulated in 2, 3, 6, or 8 above, and, for example, set a limit to the amount of loans or reject requests for loans.