BOJ-NET (Japan)

[Tomcat]

The Bank of Japan Financial Network System (BOJ-NET) was established in 1988. Commercial banks and other financial institutions that had correspondent accounts with the Bank of Japan could participate in it. By the end of the 1990s, over 370 financial institutions participated in the system. The system was intended to carry out transfers related to transactions in the money and stock markets, the settlement of net positions of private systems and settlements between commercial banks and the Bank of Japan.

At the time of its creation, the system had a number of features. First, two subsystems simultaneously functioned in it - gross settlements and netting, and the settlement participant could, at his choice, make a transfer to any of these subsystems.

Second, the Bank of Japan did not provide overdraft loans in the BOJ-NET system. All transactions on a gross basis required full coverage. The mechanism of queues of unfulfilled orders was also not used: in the absence of coverage, they were subject to return to the sending bank. Such strict conditions for gross settlements led to the fact that the majority of participants resorted to the netting system: in 1993, the amount of netting transactions carried out in the system was 50 times higher than the amount of gross settlements [Payment system .., 1995].

However, with the growth of turnover in the Japanese settlement systems and the increase in credit and settlement risks, BOJ-NET was transformed into RTGS in 2001, and the net settlement subsystem was abolished. Modern BOJ-NET consists of two blocks | Bank of Japan, 20091:

• 1) money transfer system (BOJ-NET Funds Transfer System), where the average volume of daily transactions in October 2009 amounted to 49.1 thousand transactions in the amount of 108.6 trillion yen;
• 2) the system of settlements for government securities (BOJ-NET JGB Services), the average daily volume of payments in which in October 2009 reached 80.7 trillion yens with 15.7 thousand transactions per day.

The Bank of Japan is improving the gross settlement system. In October 2008, the Bank of Japan successfully completed the first phase of measures aimed at improving the reliability and efficiency of the large-value payment system, which maintains a balance between the level of liquidity required for settlements and the minimum credit risk to which settlement participants are exposed. The Bank of Japan created liquidity replenishment mechanisms in the BOJ-NET system and transferred large payments from the private system based on the Foreign Exchange Yen Clearing System (FXYCS) to the BOJ-NET payment system. Now the Bank of Japan provides day loans free of charge, but with the condition of full collateral with securities. In the second phase of the project, the Bank of Japan plans to transfer large payments from the Zengin retail system to BOJ-NET.