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Principal Terms and Conditions for Euro Funds-Supplying Operations against Pooled Collateral


December 21, 2011
Revision: December 20, 2012
October 31, 2013
February 18, 2014
January 31, 2017

1. Purpose

  1. (1) These Terms and Conditions prescribe the principles for the Bank of Japan's euro (EUR) funds-supplying operations against pooled collateral (EUR denominated loans that are made against pooled eligible collateral by way of open market operations) introduced with the aim of further facilitating money market operations and ensuring the smooth functioning and stability of financial markets in view of recent liquidity pressures in the international financial markets and the possible impact of those on liquidity conditions in the yen money market.
  2. (2) Loans pursuant to these terms and conditions may be executed for the time being.

2. Location of Operations

At the Head Office (International Department) of the Bank.

3. Eligible Counterparties

  1. (1) Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions, etc. (as defined in Article 37, Paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) satisfying the eligibility 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) If the Bank specifically deems it necessary in order to conduct money market operations smoothly, it can implement such measures as an exclusion of the institution in question from eligible counterparties.

4. Form of Loans

Loans shall be provided in the form of electronic lending.

5. Duration of Loans

Taking account of conditions in financial markets, the Bank shall determine the duration of each loan and the duration shall not exceed three months.

6. Loan Rates

Interest rates on the loans shall be set by the European Central Bank.

7. Date of Loan Disbursement, Amount of Loans, etc.

Taking account of conditions in financial markets, the Bank shall determine specifications necessary for lending, including the date of loan disbursement, the amount, and the counterparties for each loan.

8. 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.
  3. (3) The yen denominated amount for which the counterparty shall pledge eligible collateral shall be obtained by multiplying a yen-denominated loan value based on the EUR/yen spot exchange rate prevailing in the market by the ratio calculated based on historical EUR/yen spot exchange rate fluctuations according to the duration of each loan.

Supplementary Provision

These terms and conditions shall become effective today.