Outline Of International Finance

The Bank conducts operations in the field of international finance, such as foreign exchange transactions, as well as business related to assisting foreign central banks and international organizations in their investment in yen.

The Bank conducts operations in the field of international finance, such as foreign exchange transactions, as well as business related to assisting foreign central banks and international organizations in their investment in yen.

The Bank takes part in various international discussions with foreign central banks on the state of the world economy, and in measures to ensure the stability of financial markets and to improve their structure.

The Bank also carries out international operations on behalf of the government, such as processing of notifications and reports required under the Foreign Exchange and Foreign Trade Law, compiling Japan’s balance of payments (BOP) statistics, and conducting foreign exchange intervention. 

Transactions with Foreign Monetary Authorities and International Organizations

 

The Bank assists foreign monetary authorities and international organizations in their investment in and financing of yen, by accepting yen deposits, acting as custodian for yen-denominated securities, and providing liquidation services for JGSs.

The Bank itself invests its foreign currency-denominated assets in a safe and efficient manner.

The Bank also provides technical assistance/technical cooperation on central banking business as part of its cooperation with foreign central banks, especially those in Asia. 

 

Measures to Ensure Stability in the International Financial System

 

At international forums such as meetings of the Group of Seven (G-7) countries, the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP), and the Meeting of Central Bank Governors of the Group of Ten (G-10) countries, the Bank exchanges detailed information and observations on the current state of global financial markets, including activities of financial institutions with foreign governments and foreign central banks. The Bank also participates in discussions on the formulation of new standards and guidelines for governing international financial markets to contribute to enhancing the stability and efficiency of these markets.

The Bank closely monitors international financial markets and the financial system to identify potential risks, and compiles and makes public a wide range of statistics to facilitate deeper understanding of trends in international financial markets.

When international financial crises are triggered, the governments of industrial countries and international organizations such as the International Monetary Fund (IMF) respond by providing financial support to the governments of the countries in crisis. The Bank takes part in such international support by acquiring loan claims on foreign central banks which are held by the BIS (bridging loans), and providing loans or guarantees for loans to foreign central banks and international organizations. 

Center for Monetary Cooperation in Asia (CeMCoA)

 

The International Department of the Bank established the Center for Monetary Cooperation in Asia (CeMCoA) on November 11, 2005. The center aims to further promote monetary cooperation in Asia by accumulating information and know-how at the Bank and other central banks in the region. The center’s main activities are (1) promoting monetary cooperation in Asia, (2) conducting joint research on Asia within researchers at Asian central banks and/or those outside the central banking community, and (3) strengthening technical cooperation and staff training. 

International Operations on behalf of the Government

 

The Bank carries out international operations on behalf of the government, such as processing of notifications and reports required under the Foreign Exchange and Foreign Trade Law, compiling Japan’s BOP statistics, and conducting foreign exchange intervention.

On behalf of the government, the Bank processes the filing of requests for permission, and notifications and the reporting of capital transactions, payments and receipt of payments between residents and nonresidents as required by the Foreign Exchange and Foreign Trade Law.

In 2005, the Bank started an online reporting system accessed via the Internet, to accept notifications and reports required under the Foreign Exchange and Foreign Trade Law, in order to make the procedures more efficient and convenient for the users.

The Bank also compiles statistics on Japan’s BOP and international investment position (IIP).

The entities that conduct foreign exchange intervention vary from country to country. In Japan, when the yen becomes unstable in the foreign exchange market, the government (Ministry of Finance) may instruct the Bank, its agent, to conduct foreign exchange intervention by buying or selling yen for foreign currencies as needed.

Foreign exchange intervention is, generally speaking, an operation carried out by monetary authorities, such as central banks or finance ministries, buying or selling currencies with the objective of influencing the foreign exchange rate in one way or another. In the case of Japan, the Ministry of Finance is responsible for such operations and the objective is to stabilize the value of the yen. The Bank carries out the actual operations based on instructions from the Finance Minister and acts as the agent. 

 

. "Bank Of Japan." . . Bank Of Japan. 1.31.08 <http://www.boj.or.jp/en/index.htm>.