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Trends in the Money Market in Japan*1 -- Results of the Tokyo Money Market Survey (August 2017) --

  1. *1This is an English translation of Japanese original released on October 13, 2017.

November 22, 2017
Financial Markets Department
Bank of Japan

Overview of the Tokyo Money Market Survey


The Financial Markets Department of the Bank of Japan (the Bank) has conducted the Tokyo Money Market Survey since 2008 to understand developments in the Japanese money market. Initially, this series of surveys was conducted every other year. However, to observe market trends more precisely, the Bank decided to conduct the survey annually beginning with the 2013 survey. In August 2017, the eighth survey in the series was carried out (the survey was conducted as of the end of July 2017).

As with the previous surveys, this survey covers eligible counterparties in the Bank's market operations, as well as other major participants in the money market. The number of respondents in the survey was 303 (with a response rate of 100 percent), up from 300 in the 2016 survey, mainly due to a rise in the number of eligible counterparties in the Bank's market operations.

The Bank intends to capture comprehensively and from various angles the situations and structural changes in the money market, utilizing the results of this survey as well as the results of the Bond Market Survey. The Bank will continue to enhance dialogue with market participants by taking advantage of the Meeting on Market Operations and the Bond Market Group to actively support the relevant parties in their efforts to enhance the Japanese financial markets, including the money market. The Bank intends to contribute significantly to such endeavors in its capacity as Japan's central bank.


The amounts outstanding in the money market increased from the levels of the previous year on both the cash borrowing side and the cash lending side.

The amounts outstanding increased against the backdrop of an increase in arbitrage transactions that took advantage of the three-tier system of financial institutions' current accounts at the Bank. This can be attributed to the following reasons. First, the market had adjusted to trading at negative interest rates; IT systems had been adjusted to enable trading at negative interest rates and the number of market participants who trade at negative interest rates had increased after the elapse of considerable time since the introduction of the negative interest rate policy. Second, the funding needs of cash borrowers who were presented with greater arbitrage opportunities under the higher upper bound on macro add-on balances had grown. They borrowed cash at negative interest rates in the money market and piled it up in their current accounts at the Bank. Third, the investment needs of cash lenders had grown mainly due to the inflows of funds from the redemption of Japanese government bonds (JGBs). They were inclined to direct lending toward the money market to avoid the application of the policy rate.

By type of transaction, the amounts outstanding of repo transactions and call transactions increased, while transactions with the Bank and treasury discount bills (T-Bills) contributed to an increase on the cash borrowing side and the cash lending side, respectively.

With respect to the functioning of the money market, although the share of respondents who answered that it had "declined" decreased significantly from the previous year (61 percent in 2016 to 17 percent in 2017), it continued to exceed that of "improved" (9 percent in 2017).

The Bank intends to continue to monitor closely the developments in the money market through day-to-day monitoring activities, the implementation of the Tokyo Money Market Survey, and dialogue with market participants.


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Financial Markets Department, Bank of Japan
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Market Infrastructure Group, Market Infrastructure Division, Financial Markets Department

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