Payment Flows for Settlement of Foreign Exchange Trades: Japan's Experience since 2002

Akiko Kobayashi, Yasuho Hama and Kei Imakubo
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Akiko Kobayashi: Bank of Japan
Yasuho Hama: Bank of Japan
Kei Imakubo: Bank of Japan

No 07-E-4, Bank of Japan Review Series from Bank of Japan

Abstract: This paper reviews changes in foreign exchange settlement for the yen since the introduction of CLS and how the changes have affected payment flows in the BOJ-NET. After the introduction of CLS in September 2002, a large value of yen payments migrated from the FXYCS to CLS, which, among other things, have resulted in larger amount of liquidity needed for settlement through the FXYCS. The design of CLS settlement process gave rise to time-critical payments in the BOJ-NET and heightened the interdependencies among RTGS systems for the relevant currencies. Analysis also indicates that the additional payment flows that have resulted from these changes could facilitate settlement in the BOJ-NET.

Date: 2007-08
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Persistent link: https://EconPapers.repec.org/RePEc:boj:bojrev:07-e-4

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