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Trends in and Challenges for the Money Market in Japan*1

Results of the Tokyo Money Market Survey (August 2012)

  • *1This is an English translation of Japanese original released on February 28, 2013.

May 15, 2013
Financial Markets Department
Bank of Japan

Introduction: Overview of the Tokyo Money Market Survey

In August 2012, the Financial Markets Department of the Bank of Japan conducted the third Tokyo Money Market Survey to identify developments in the Japanese money market and confirm how a number of market-related issues were being addressed. This paper's review is based on the results of the survey.

The first survey, conducted in August 2008, reviewed the impact on the Japanese money market of the subprime housing loan problem and the Lehman shock, which occurred immediately after the questionnaires were collected, and pointed in particular to issues arising in the repo market. The second survey, conducted in August 2010, reviewed developments in the money market about two years after the Lehman shock, and confirmed that market participants had made progress in addressing the issues identified in the first survey.

This third survey investigated developments as of the end of July 2011 and 2012, focusing on the amounts outstanding of call and repo transactions. The number of respondents in the survey increased dramatically from the previous survey, to 234 from 190. Likewise, the number of eligible counterparties in the Bank's money market operations rose significantly (to 211 from 172), and major general insurance companies, which are not eligible counterparties in the Bank's money market operations, participated in the survey for the first time.

This paper comprises the following: Section 2 reviews developments in the money market, focusing on developments since the previous survey, by exploring market trends in each market and market participants' attitudes toward money market transactions. Section 3 reviews how issues in the money market are being addressed. In addition to the issues such as the widespread adoption of the fails practice for Japanese government bonds (JGBs), the shortening of the payment and settlement period for JGBs, and the improving robustness and participation of central clearing of JGBs, all of which have been recognized as market-wide issues in light of the experience of the Lehman shock, this survey explored efforts to enhance the effectiveness of the business continuity plan (BCP) for money market transactions, whose importance has been recognized increasingly since the Great East Japan Earthquake. Lastly, Section 4 sums up the findings obtained from this survey.


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Market Infrastructure Group, Market Infrastructure Division, Financial Markets Department

Kenji Nishizaki
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Masashi Osakada
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