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

November 2006
Payment and Settlement Systems Department
Kei Imakubo and Hidetsugu Chida

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.

Notice

This series explains recent economic and financial topics in a plain and concise manner for a wide range of readers. The views expressed in the report are those of the authors and do not necessarily reflect the views of the Bank of Japan.

Comments and questions as well as requests for hard copies should be addressed to Takeshi Shirakami, Director, Payment and Settlement Systems Department (takeshi.shirakami@boj.or.jp).