FINANCE 211T MWF 5-6 P.M.
Professor Andres J. Teves
Japanese Central Bank
Maniego, Ronilyn C. BSTM-3T
Key Activities of Japan’s Central Bank,
Bank of Japan
The Bank of Japan (BOJ) is the central bank of Japan. Its primary objectives are implementing monetary policy, issuing banknotes, providing settlement services and ensuring the stability of the financial system, managing treasury and government-related securities operations, and compiling data and economic analyses.
The Bank is comprised of a policy board, bank executives, and 15 other various departments. The policy board is the highest decision-making body. Headed by the governor, currently Toshihiko Fukui, and eight deputy governors, the policy board “determines the guidelines for currency and monetary control, sets the basic principles for carrying out the bank’s operations, and oversees the fulfillment of the duties of bank executives, excluding Executive Auditors and Counselors.”
The Bank’s monetary policy is aimed at monitoring price stability and money market operations, and holding Monetary Policy Meetings (MPM) once or twice a month for one or two days. Through money market operations, the Bank alters the amount of funds in the money market, ultimately influencing interest rates in other financial markets. Monetary policy decisions must be passed through a majority vote of the nine members of the policy board during MPMs.
The Bank focuses on stability for financial systems by examining on and off-site financial institutions, acting as a lender in a time of crises, supporting private-sector initiatives, and collaborating with other foreign central banks to prevent the outbreak of international financial crises.
As per international finance, the Bank conducts operations with foreign monetary authorities and international organizations to assist with yen-denominated investments. The international department runs the Center for Monetary Cooperation in Asia (CeMCoA) to further promote monetary cooperation in Asia. Finally the Bank carries out international operations on behalf of the government, such as processing notifications and reports, compiling Japan’s Balance of Payments statistics, and carrying out foreign exchange intervention.
Domestic services relating to the government provided by the Bank include treasury funds and Japanese Government Securities (JGS) services. The Bank accepts deposits from the government as government deposits and issues, registers, and makes payment of principal and interest on JGSs.
By law, the Bank is required to inform most of its policy board decisions to the public in a timely fashion. The Bank must release the minutes and transcripts of MPMs, report to the Diet (Japan’s legislature), and make a formal public announcement regarding the Gyoumu Gaikyo Sho, or the Outline of Business Operations.
Source: BOJ Website, http://www.boj.or.jp/en
Outline of the Bank
Objectives Organization Capital History References
The Bank of Japan is the central bank of Japan. It is a juridical person established based on the Bank of Japan Act (hereafter the Act), and is not a government agency or a private corporation.
The Act sets the Bank's objectives "to issue banknotes and to carry out currency and monetary control" and "to ensure smooth settlement of funds among banks and other financial institutions, thereby contributing to the maintenance of stability of the financial system."
The Act also stipulates the Bank's principle of currency and monetary control as follows: "currency and monetary control by the Bank of Japan shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy."
The Bank's business operations to achieve the above objectives are described in About the Bank, Monetary Policy, Financial System, Payments and Markets, Banknotes, The Bank's Treasury Funds and JGS Services,...
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