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A Guide to "Monetary Base and the Bank of Japan's Transactions"


June 8, 2000
Bank of Japan
Policy Planning Office

I. Introduction

In order to implement monetary policy appropriately, the Bank of Japan carries out transactions with financial institutions daily; examples are (1) conducting market operations including purchase/sale of Japanese Government securities (JGSs) and bills and (2) extending loans. The Bank also performs transactions with the Government including receipt/withdrawal of deposits and purchase/sale of JGSs. In addition, the Bank conducts transactions with foreign central banks and the Deposit Insurance Corporation. All of these transactions interrelate with banknotes in circulation and current account balances (hereafter CABs), which are regarded as currency supplied by the Bank.1

Banknotes in circulation and CABs are components of liabilities in the Bank of Japan's balance sheet. Other transactions mentioned above are also reflected in the balance sheet as changes in assets or liabilities. However, it is difficult to understand the various transactions and funds provision of the Bank solely from the Bank's balance sheet partly due to the fact that it is compiled according to accounting rules.

The Bank of Japan has therefore decided to compile and publish monthly the "Monetary Base and the Bank of Japan's Transactions," (hereafter "MB-BOJT") which shows clearly how the Bank is supplying funds by reconstructing the items of the Bank's balance sheet. What follows is an explanation including a guide to these statistics and their features.

  1. CABs are held by banks (city banks, regional banks, regional banks II, and trust banks), long-term credit banks, foreign banks in Japan, Shinkin banks, The Zenshinren Bank, The Shinkumi Federation Bank, National Federation of Labor Credit Associations, securities companies, securities finance companies, foreign securities companies in Japan, Tanshi companies, stock exchanges, bankers' associations, Deposit Insurance Corporation, and Government financial institutions and others.