Maintenance of a designated minimum amount of balances by the Japan Post with the Bank of Japan
March 5, 2003
Bank of Japan
At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan voted to approve that the Bank shall enter into a contract with the Japan Post, on April 1, 2003, for its maintenance of a designated minimum amount of balances, in the form of a current account, with the Bank.The contract shall become effective on April 1, 2003.
The Japan Post, which will be established on April 1, 2003, as a result of reorganization of the Postal Services Agency, is scheduled to have a current account with the Bank for its funds settlement.Unlike private financial institutions, the Japan Post is not subject to the reserve requirements unless otherwise designated by the Cabinet Order (No designation has been made.).Under such circumstances, the contract for maintenance of a designated minimum amount of balances with the Bank is designed to ensure smooth money market operations.
The summary of the contract is as follows;
- (1) The Japan Post shall maintain a sum of balances (monthly average) equal to or more than a designated amount in the form of a current account with the Bank.
- (2) The designated minimum amount of a current account shall be calculated by multiplying balances of "time postal savings" and "demand postal savings" by the corresponding maintenance ratios.
- (3) The Bank shall determine maintenance ratios.
The Bank has also established a calculation formula for the maintenance ratios.In essence, the maintenance ratios for the Japan Post shall be set at the average effective reserve requirement ratios for private financial institutions during the previous year (i.e. ratios of total required reserves on time/demand deposits to total time/demand deposit balances subject to the reserve requirements). The maintenance ratios shall be reviewed annually by the Bank.
For more details, see Japanese version of this announcement.