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Money Market Operations in FY2002

Open Market Operations Division

The views expressed in the Review are those of the authors and do not necessarily represent the views of the Bank of Japan. Comments and questions as well as requests for hard copies should be addressed to Tokiko Shimizu, Deputy Director, Financial Markets Department (

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In FY2002, the Bank of Japan (hereafter, the Bank) continued to provide ample liquidity under the high target level for current account balances held at the Bank. In the short-term money markets, the uncollateralized O/N call rate remained close to 0%, and for financial institutions, the opportunity cost of holding current account deposits at the Bank was negligible. As a result, demand for current account deposits at the Bank fluctuated widely, and a decrease in demand gave rise to under-bidding for fund providing operations, while an increase prompted greater needs for such operations. The Bank, bearing in mind these wide fluctuations in demand for current account deposits, sought to effectively implement the guidelines for money market operations and maintain stability in the money markets through the enhancement of operational tools and attentive market monitoring.