Money Market Operations in Fiscal 2005

Financial Markets Department
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Financial Markets Department: Bank of Japan

No 2006-08-31, Bank of Japan Research Papers from Bank of Japan

Abstract: For most of fiscal 2005, the Bank of Japan conducted money market operations with the target of maintaining the outstanding balance of current accounts at the Bank at around 30-35 trillion yen decided at the Monetary Policy Meeting (MPM) on January 19 and 20, 2004. This target level significantly exceeded the required reserves, approximately 6 trillion yen, to be held by financial institutions at the Bank under the reserve requirement system and other requirements.1 Meanwhile, it was decided at the MPM on May 19 and 20, 2005, against the backdrop of weaker bidding incentives by counterparties in the Bank's funds-supplying operations reflecting increased abundance of liquidity at financial institutions, to amend the proviso to add that there may be cases where the balance of current accounts fell short of the target when it was judged that liquidity demand was exceptionally weak considering such factors as responses of financial institutions to the Bank's funds-supplying operations.

Date: 2006-08-31
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