BOJ-NET Funds Transfers after the End of the Quantitative Monetary Easing Policy

Kei Imakubo and Hidetsugu Chida
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Kei Imakubo: Bank of Japan
Hidetsugu Chida: Bank of Japan

No 06-E-5, Bank of Japan Review Series from Bank of Japan

Abstract: In 2001, the BOJ-NET Funds Transfer System (BOJ-NET) was converted to a full-fledged real-time gross settlement (RTGS) system. RTGS reduces settlement risk in the system compared with deferred net settlement (DNS), but requires participants to take appropriate measures to manage their intraday liquidity. Under the quantitative monetary easing policy (QMEP), the liquidity constraint was not binding and smooth flow of payments could be achieved in the system. With the recent changes in financial environments, the liquidity constraint has become more binding, and participants may encounter, for the first time, issues associated with the management of liquidity and payment flows. This paper analyzes changes in payment activities and intraday settlement exposures before and after the end of QMEP, and reviews possible measures that could be taken to further facilitate smooth flow of payments in BOJ-NET.

Date: 2006-11
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