Toward More Digitized Treasury Funds Operations
March 29, 2000
Bank of Japan
- In Japan, the Bank of Japan and private financial institutions as its agents handle most treasury funds operations for the government, such as receipt of national taxes and payment of social security benefits.The Bank believes that thanks to the revolutionary progress in information technology (IT) in the last few years, introduction of advanced IT into these operations would yield substantial benefits, and has therefore recently started discussions on digitization of such operations with various ministries and governmental agencies as well as private financial institutions.
- The Bank expects that more digitized treasury funds operations will make payment and receipt of money between the public and the government more convenient.For example, individuals and businesses will be able to use their personal computers or other information terminals to pay national taxes and social security premiums to the government.In the United States, the Electronic Federal Tax Payment System (EFTPS) started in 1996.This system offers businesses the convenience of making all their federal tax payments electronically 24 hours a day, 7 days a week, instead of using paper documents.Some individuals may benefit from quicker disbursement of money from the government.
- More digitized treasury funds operations will also bring higher efficiency to the services of the government, private financial institutions and the Bank itself, which, in turn, will create such benefits as a reduction in costs which are ultimately borne by the public.
- In December 1999, the government published an action plan for movement toward a "Digital Government" in its "Millennium Project."The Bank's initiative to more digitize treasury funds operations is in line with this action plan.Since treasury funds operations involve a large number of governmental bodies and financial institutions, this initiative itself may contribute to the expansion of the IT-related markets.
- The Bank believes that the digitized treasury funds operations will have two key features; they will be paperless and network-based.Paper documents will be replaced by electronic messages.Paper money, coins and checks as a method of payment will be replaced by electronic debit instructions to account-holding financial institutions.Computer networks linking various governmental bodies, private financial institutions, and the Bank will carry such messages and instructions, which will eventually lead to straight-through processing (STP).
- A security- and cost-conscious approach is indispensable in achieving more digitized treasury funds operations.The institutions connected by networks must collaborate to maintain the high security level in the network for treasury funds operations in order to ensure public confidence in the network.To save costs, it is preferable to use multi-purpose and extensible networks, standard protocols and common data formats.Multiple networks may be used for diversified operations.Modification of some operations processes may prove desirable.
- As it is not feasible to introduce advance IT in all kinds of treasury funds operations at once, the Bank will take a step-by-step approach, envisaging consistent and efficient linkage between several operations in the near future.In this context, the Bank recognizes that discussions with governmental bodies and private financial institutions are vitally important.The Bank will of course also welcome opinions from the public on this matter.