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November 29, 2019
Financial Markets Department
Bank of Japan
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 2019, the tenth survey in the series was carried out (the survey was conducted as of the end of July 2019).
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 302 (with a response rate of 100 percent).
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 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.
This was because, as arbitrage trading that took advantage of the three-tier system of financial institutions' current accounts at the Bank became established, (1) cash borrowing needs increased in the money market due to the impact of the change in the size of the policy-rate balance decided at the Monetary Policy Meeting held at the end of July 2018, (2) cash lending for arbitrage purposes increased as the GC repo rate on many occasions exceeded the short-term policy interest rate of minus 0.1 percent, and (3) lending by investment trusts became more active due to an increase in surplus funds from increased cash borrowing through equity repo transactions.
By type of transaction, the amount outstanding of both call (uncollateralized and collateralized) and repo transactions increased significantly from the previous year.
With respect to the functioning of the money market, the share of respondents who answered that it had "declined" decreased from the previous year, and over 80 percent of all respondents answered that it remained "mostly unchanged."
The Bank intends to continue to closely monitor 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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