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The Bank of Japan's Eligible Collateral Framework and Recently Accepted Collateral*1

  • *1This paper is a revised version of "The Bank of Japan's Eligible Collateral Framework and Recently Accepted Collateral," which was originally published as Market Review 2003-E-1.

May 12, 2003
Bank of Japan

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Summary

The Bank of Japan completely revised its eligible collateral framework and related system infrastructure during the period from late 2000 to early 2001. In June 2002, the Bank began to release data on the amount outstanding of collateral it accepted. Eligible collateral is selected with emphasis on "creditworthiness" and "marketability" of financial instruments the Bank accepts to ensure the soundness of the Bank's balance sheet. The range of instruments eligible as collateral includes Japanese government bonds (JGBs), financing bills (FBs), corporate bonds, bills, CP, and other financial assets. The amount outstanding of collateral accepted, mainly consisting of JGBs, was approximately 70 trillion yen as of the end of December 2002, of which nearly 50 percent was actually being used for liquidity provision by the Bank.