The Bank of Japan has decided to invest in improvements to the BOJ Net funds transfer system used by banks to settle Yen trades and JGBs. A task force will solicit opinion from the private sector.
Over 400 financial institutions – domestic banks and brokerages and Japan branches of overseas financial institutions – use the BOJ Net to settle obligations between them, but the current system is becoming outdated. “The current requirements involve an expensive dedicated terminal, and as it is not off-the-shelf standard equipment, the maintenance cost is becoming costly,” explains a spokesman for Bank of Tokyo Mitsubishi in Tokyo.
He says the Bank of Japan intends to enable market participants to connect to the BOJ Net through standard PCs, by no later than April 2006. Yen 32 billion is being allocated to the project. Banks will have to upgrade their systems as well.