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Copy of Bank of Japan\

Fina305 report

Graciel Ilar

on 19 March 2013

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Transcript of Copy of Bank of Japan\

Group 4 Bank of Japan Bank of Japan Group 4 The Bank of Japan is the Central bank of Japan.
It is a JURIDICAL PERSON established based on the bank of Japan Act (hereafter the Act), and is not a government agency or a private corporation. Bank's highest decision-making body
determines the guideline for currency and monetary control, sets basic principle for carrying out the Bank's operations, and oversees the fulfillment of the duties of the Bank's officers, excluding Auditors and Counselors The Policy Board http://www.boj.or.jp/en/about/index.htm/ Bank of Japan Notes and Coins Currently Issued Incumbent
Masaaki Shirakawa
since March 20,2008 Governor of Bank of Japan DESCALZO, John Vincent
ILAR, Graciel M.
PEREZ, Jhulie Anne
SALAYO, Michella Ira
SANCHEZ, Katrina Grace
SAN PABLO, Alexandra Mae M. Objectives to issue bank notes and to carry out currency and monetary control
to ensure smooth settlement of funds among banks and other financial institutions, thereby contributing to the maintenance of stability of the financial system Organization The Policy Board
The Bank's Officers
Departments, Branches, Local Offices in Japan, and Overseas Representative Offices The Bank's Officers They are the Policy Board member
Governor (1)
Deputy Governor (2)
Members of the Policy Board (6)
Auditors (3 or fewer)
Executive Directors (6 or fewer)
Counselors (few) Departments, Branches, Local Offices in Japan, and Overseas Representative Offices Governor Exercises general control over the Bank's business and is in charge of the Internal Auditors' Office Deputy Governors Administers the business of the Bank, assisting the Governor, and is in charge of New BOJ-Net Planning. There are 15 departments at the Bank's Head Office
The Bank has 32 branches and 14 local offices in Japan, and seven overseas representative offices History Established under the Bank of Japan Act (promulgated in June 1882)
Began operation on October 10,1882 as the nation's central bank.
Reorganized on May 1, 1942 in conformity with the Bank of Japan Act (hereafter the Act of 1942), promulgated in February 1942 The Act of 1942 was amended several times after World War II. Such amendments included the establishment of the Policy Board as the Bank's highest decision-making body in June 1949.
was revised completely in June 1997 under the two principles of "independence" and "transparency." The revised act (the Act) came into effect on April 1, 1998. Outline of Banknotes and Coins The Bank is the sole issuer of banknotes (Bank of Japan notes) in Japan. It issues banknotes and conducts operations to ensure the stability of banknote supply and to maintain public confidence in banknotes.

Specifically, the Bank receives/pays banknotes from/to financial institutions. It counts the banknotes it receives from them, examines them to verify their authenticity, and checks their fitness for recirculation.

Coins are delivered to the Bank by the government and are put into circulation. Issuance of Banknotes The Law stipulates that the Bank issues banknotes.

Banknotes are manufactured by the National Printing Bureau, which is an incorporated administrative agency, and are delivered to the Bank in exchange for the manufacturing cost. Banknotes are issued and put into circulation when financial institutions that hold current accounts at the Bank (BOJ account holders) withdraw them from their current accounts at the Bank.

Banknotes are a widely used payment instrument, especially for small-sized payments. The Law stipulates that banknotes shall be used for payment as legal tender, in other words, they are a legally defined payment instrument that should not be refused by any creditor in satisfaction of any debt.

The Bank issues banknotes in four denominations: 10,000 yen, 5,000 yen, 2,000 yen, and 1,000 yen. Circulation of Banknotes Individuals and firms obtain banknotes issued by the Bank by withdrawing money from their deposit accounts at financial institutions. Banknotes are used for the purchase of goods and services, financial transactions, tax payments, and other purposes. A portion of the banknotes is brought back to financial institutions and held as deposits.

Financial institutions bring their excess banknotes to the Head Office or branches of the Bank and have their BOJ accounts credited. When banknotes return to the Bank, they are withdrawn from circulation.

The Bank and financial institutions serve as bases for banknote circulation, to ensure that banknotes circulate throughout the country. Maintenance of Banknotes The Bank carries out various operations concerning banknotes to ensure that public confidence in banknotes is maintained. When banknotes return to the Head Office or branches of the Bank, the Bank counts them and verifies their authenticity rigorously to prevent counterfeit or altered banknotes from being returned to circulation. It also separates returned banknotes into those suitable for recirculation and those too damaged or worn for further circulation. Banknotes that are judged to be unfit for recirculation are destroyed. This process is called the examination of banknotes. Those in good condition are used for further circulation. The Bank exchanges damaged or worn banknotes for new ones at the Head Office or branches of the Bank. In order to prevent counterfeiting and altering, banknotes are incorporated with many security features. Given the surge in recent years in the number of counterfeit banknotes detected, on November 1, 2004, the Bank began issuing the new series of Bank of Japan notes (10,000, 5,000, and 1,000 yen notes) with state-of-the-art security features. To address counterfeiting on a global basis, the Bank actively exchanges information and conducts joint studies with foreign central banks. Coins Coins are issued by the government. Coins are minted by the Japan Mint, which is an incorporated administrative agency, and are deemed to be issued when they are delivered to the Bank.

Coins, the same as banknotes, are put into circulation when BOJ account holders withdraw them from their accounts at the Bank. References: Style
Term length
Inaugural holder
Formation His Excellency
Prime Minister
Five Years
Yoshihara Shigetoshi
October 6, 1882 FM3B Asst. Prof. Angelo Bonoan Monetary Policy and Central Banking http://en.wikipedia.org/wiki/Bank_of_Japan Dai-Ichi Kangyo Bank one of the largest banks in the world during the latter half of the 20th century It combined with Fuji Bank and the Industrial Bank of Japan in 2000 to form Mizuho Financial Group. literally the first bank and the first joint stock company ever to be established in Japan Subsequently, it became a purely commercial bank based in Tokyo. it was originally empowered to issue banknotes, until the Bank of Japan assumed this function in 1883 The Bank of Japan, established in 1882,
is the sole bank that issues the yen;
it also plays an important role in determining
and enforcing the government’s economic and financial policies.
Until the late 1990s the bank was under the indirect control of the Ministry of Finance,
but legislation enacted at that time made it autonomous of the ministry.
Also in the late 1990s a new Financial Supervisory Agency
(since 2000 called the Financial Services Agency) was established to take over auditing and supervisory operations formerly performed by the Ministry of Finance. Like most modern Japanese institutions, the Bank of Japan was founded after the Meiji Restoration. Prior to the Restoration, Japan's feudal fiefs all issued their own money, hansatsu, in an array of incompatible denominations, but the New Currency Act of Meiji 4 (1871) did away with these and established the yen as the new decimal currency, which had parity with the Mexican silver dollar. The former han (fiefs) became prefectures and their mints became private chartered banks which, however, initially retained the right to print money. For a time both the central government and these so-called "national" banks issued money. A period of unanticipated consequences was ended when the Bank of Japan was founded in Meiji 15 (1882) after a Belgian model. It has since been partly privately owned (its stock is traded over the counter, hence the stock number). A number of modifications based on other national banks were encompassed within the regulations under which the bank was founded.The institution was given a monopoly on controlling the money supply in 1884, but it would be another 20 years before the previously issued notes were retired. Following the passage of the Convertible Bank Note Regulations (May 1884), the Bank of Japan issued its first banknotes in 1885 (Meiji 18). Despite some small glitches—for example, it turned out that the konnyaku powder mixed in the paper to prevent counterfeiting made the bills a delicacy for rats—the run was largely successful. In 1897 Japan joined the gold standard and in 1899 the former "national" banknotes were formally phased out. Reorganization The BOJ was reorganized in 1942 Under the Bank of Japan Act of 1942 ( 1767?). There was a brief post-war period during the Occupation of Japan when the bank's functions were suspended, and military currency was issued. In 1949, the bank was again restructured.

In the 1970s, the Bank's operating environment evolved along with the transition from a fixed foreign currency exchange rate and a rather closed economy to a large open economy with a variable exchange rate. During the entire post-war era, until at least 1991, the Bank of Japan's monetary policy has primarily been conducted via its 'window guidance' ( credit controls (which are the model for the Chinese central bank's primary tool of monetary policy implementation), whereby the central bank would impose bank credit growth quotas on the commercial banks. The tool was instrumental in the creation of the 'bubble economy' of the 1980s. It was implemented by the Bank of Japan's then 'Business Department' (, which was headed during the 'bubble years' from 1986 to 1989 by Toshihiko Fukui (who became deputy governor in the 1990s and governor in 2003). A major 1997 revision of the Bank of Japan Act (jp:) was designed to give it greater independence; however, the Bank of Japan has been criticized for already possessing excessive independence and lacking in accountability before this law was promulgated. A certain degree of dependence might be said to be enshrined in the new Law, article 4 of which states:

"In recognition of the fact that currency and monetary control is a component of overall economic policy, the Bank of Japan shall always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government's economic policy shall be mutually harmonious.
However, since the introduction of the new law, the Bank of Japan has persistently rebuffed government requests to stimulate the economy.
On October 30, 2012, The Bank of Japan announced that it has undertaken further monetary-easing action for the second time in a month in an effort to tackle deflation. Bank of Japan's Missions •Issuance and management of banknotes •Implementation of monetary policy •Providing settlement services and
ensuring the stability of the financial system •Treasury and government securities-related operations •International activities •Compilation of data, economic analyses and research activities Bank of Japan :
Financial Statements Balance Sheet The following graphs from Greshhams law
show that the Bank of Japan mostly works on local assets
and that on the asset side Japanese government bonds and
on the liability side bank notes are most important. A history of Bank of Japan interventions “All investors know that intervention will not stop the yen strength,” Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo, which manages $7.3 billion of assets, said in a telephone interview on May 30. “Intervening at this stage would be unwise and a waste of money. As long as Europe remains in a state of confusion, yen will continue to be bought for its relative safety.”

Japan sold 14.3 trillion yen ($183 billion) last year, the third-most on record, Ministry of Finance data show, to slow the currency’s gains after the country was struck by an earthquake and the worst nuclear crisis in a generation.“All investors know that intervention will not stop the yen strength,” Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo, which manages $7.3 billion of assets, said in a telephone interview on May 30. “Intervening at this stage would be unwise and a waste of money. As long as Europe remains in a state of confusion, yen will continue to be bought for its relative safety.”

The huge difference is that the Swiss buy foreign assets and foreign currency whereas the Japanese held only local assets at least until the introduction of the new asset purchase program that buys T-Bills in the open market. Against the previous versions of September and October, T-Bill purchases until end June were increased twice by 5 trillion yen each time. T-Bills amount to 24.5 Tril. yen until end December, which is about 5% of GDP. JGB and other purchases outweigh T-Bills, so the weight of foreign assets will remain relatively in the balance sheet, namel
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