1. Purpose
(1) The Bank of Japan shall, as Japan's Central Bank, issue bank notes, and formulate and implement monetary policy. In carrying out its monetary policy duties, the Bank shall contribute to the development of a sound national economy through the maintenance of price stability.
(2) In addition to its duties prescribed in subsection (1), the
Bank shall contribute to the maintenance of an orderly credit
system by securing smooth funds settlements for financial institutions.
2. Ensuring the Independence and Transparency of the Bank's Monetary Policy
(1) The Bank of Japan's independence in formulating and implementing monetary policy shall be respected.
(2) The Bank shall endeavor to publicly disclose the contents
of its decisions, and decision making process, regarding monetary
policies.
3. Relationship to the Government
The Bank of Japan shall maintain close communication with the
government to ensure there is sufficient mutual understanding
to secure consistency between the government's economic policy
and its monetary policy.
4. The Public Nature of the Bank of Japan
(1) The Bank of Japan shall properly and effectively conduct its operations in light of the public nature of its activities and assets.
(2) In implementing this law, the Bank's independence in carrying
out its operations shall receive sufficient consideration.
5. The Bank of Japan's Status and its Capital
(1) The Bank of Japan is a corporation.
(2) The Bank of Japan's current capital levels and structure will
be maintained.
6. The Main Office and Branches
(1) The main office of the Bank shall be located in Tokyo.
(2) The Bank may, with the permission of the Minister of Finance, establish branches, offices, and agencies.
(3) Where the Finance Minister does not provide the permission
referenced in subsection (2), its decision and reason will be
promptly made public. (As a general principle, this will apply
to other portions of this law concerning the Finance Minister's
permission and approval.)
7. Articles of Association
The Bank of Japan must obtain the Finance Minister's permission
for any changes in its Articles of Association.
1. Establishment
The Policy Board shall be established as an internal institution of the Bank of Japan.
*[The so-called directors meetings will be terminated.]
2. Authority
(1) The Policy Board shall have authority to determine the following matters:
1) Issues concerning monetary policy, such as changes in the discount rate, market operation policies, control of reserve rates, and basic evaluation of financial condition.
2) Issues concerning management of the Bank's other activities, such as activities contributing to the maintenance of an orderly credit system and examination of financial institutions.
3) Issues regarding the basic policy for conducting the Bank's business.
(2) The Policy Board shall supervise the Bank's officers' execution
of their duties.
3. Organization and Structure
(1) The Policy Board shall be comprised of the following 9 members:
Governor 1 person
Vice Governors 2 persons
Board Members 6 persons
* The position of Government Representatives is abolished.
(2) The Policy Board shall, by vote, elect its Chairperson from among its members.
(3) The Governor and Vice Governors shall, at the Policy Board
meetings, carry out their duties as Board members independently.
4. Proceedings
(1) A quorum shall consist of not less than two-thirds of all Policy Board members.
(2) Decisions shall be adopted by a majority vote of the members present.
(3) Meetings of the Policy Board to discuss issues concerning
monetary policy shall be held at regular intervals. In certain
circumstances, the Policy Board may hold special meetings.
5. Attendance by the Government
(1) The Minister of Finance or his designee in the Ministry of Finance, or the Director of the Economic Planning Agency or his designee in the Economic Planning Agency, where necessary, may attend the Policy Board meetings referenced in section 4(3) above and state their opinions.
(2) The person(s) from the Government may submit proposals regarding monetary policy for deliberation.
The person(s) from the Government may make a motion to postpone
Policy Board decisions until the following meeting. In such an
event, the Policy Board shall decide whether to adopt or reject
such a motion.
6. Public Disclosure of the Meetings' Agenda
(1) The Chairperson of the Policy Board shall, at the conclusion of the meetings referenced in section 4(3) above, expeditiously make a summary of the meeting's agenda public after obtaining the approval of the Policy Board.
(2) The Chairman of the Policy Board shall publicly disclose the
record of a meeting referenced in section 4(3) above within a
suitable period of time, as determined by the Board, after the
meeting.
1. Structure of Officers
There shall be the following officers of the Bank of Japan:
Governor 1 person
Vice Governors 2 persons
Board Members 6 persons
Executive Directors 6 persons (or less)
Auditors 3 persons (or less)
Advisors (An unspecified few)
2. Duties and Authority of Officers
(1) The Governor shall represent the Bank of Japan and execute its entire operations in accordance with the decisions of the Policy Board.
(2) The Vice Governors shall represent the Bank of Japan, assist the Governor, and execute the operations of the Bank. Whenever the Governor is prevented from attending to his duties, a Vice Governor shall act in his place.
(3) The Directors shall assist the Governor and Vice Governors and execute the operations of the Bank.
(4) The Auditors shall inspect the business of the Bank of Japan, and were it is deemed necessary, based on the result of such inspection, may express their opinions to the Minister of Finance or Policy Board.
(5) The Advisors shall respond to Policy Board inquiries, and
where it is deemed important, may express their views to the Policy
Board on any important affairs concerning the operations of the
Bank.
3. Appointment of Officers
(1) The Governor and the Vice Governors shall be appointed by the Cabinet with the consent of both Houses.
(2) The Board members shall be appointed by the Cabinet from among persons of superior experience and knowledge of economics, finance, or other matters.
(3) The Auditors shall be appointed by the Cabinet.
(4) The Executive Directors and the Advisors shall be recommended
by the Policy Board and appointed by the Minister of Finance.
4. Officers' Terms of Office
Officers shall have the following terms of office and shall be eligible for reappointment.
Governor, Vice Governors, and Board Members 5 years
Executive Directors and Auditors 4 years
Advisers 2 years
5. Security of Officers' Positions
Except in the following cases, Bank of Japan Officers shall not be dismissed against their will during their tenure of office.
Where they have been:
1) adjudicated incompetent, quasi-incompetent or bankrupt;
2) punished under this Law;
3) sentenced to imprisonment or received any other severer punishment;
4) deemed incapable of discharging their duties by the Policy Board, because of physical or mental disorders.
*The Officers shall not be dismissed for holding opinions different
from that of the Government.
6. Limitation on the Officers' Activities
Bank of Japan officers may not, during their terms of office:
1) Become candidates for the National Diet, assemblies of any local public body, or of any elective public office;
2) Become officers of political parties, or any other political bodies, or positively engage in political activities;
3) Engage in remunerative work, except where permitted by the Policy Board as not interfering with the proper discharge of their duties;
4) Engage in commerce or other business for pecuniary gain.
7. Duty of the Officers and Staff to Protect Confidential Information
(1) The officers and staff of the Bank of Japan may not leak or appropriate any confidential information obtained in pursuit of their duties.
(2) For purposes of the Penal Code and other penal provisions, the officers and staff of the Bank of Japan shall be deemed to be personnel engaged in public service in accordance with laws and ordinances.
8. Standard of Remuneration
The Bank of Japan shall determine the standard of remuneration
in conformity with general social conditions, and report it to
the Minister of Finance and public.
9. Rules Applicable to Officers and Staff
The Bank of Japan shall establish rules for its officers and staff
regarding their duty of loyalty, limitations on their employment
in the private sector, and other matters. The Bank shall report
those rules to the Minister of Finance and public.
1. Ordinary business operations
The Bank of Japan shall, pursuant to section 1, chapter I , undertake the following business:
1) Discounting of commercial paper and other bills or notes;
2) Making loans against collateral in the form of bills or notes, Government bonds and obligations;
3) Buying and selling of commercial paper and other bills and notes, Government bonds and obligations, and other bonds or debentures;
4) Drawing of bills for sale;
5) Accepting deposits;
6) Dealing in domestic exchange;
7) Accepting custody of articles of value, and buying and selling of gold and silver bullion;
8) Performing other business incidental to the businesses enumerated
above.
2. Business Operations Relating to the Government
(1) The Bank of Japan may undertake the following business with the Government:
1) Making unsecured advances to the Government in accordance with the provisory clause in Article 5 of the Finance Act, and subscribing to, or taking up Government loan issues;
2) Making temporary unsecured advances to the Government, and subscribing to or taking up the Financing Bills and other accommodation bills.
(2) The Bank of Japan shall undertake the management of Treasury funds.
(3) The Bank of Japan shall carry out the businesses relating
to currency and finance on behalf of the Government.
3. Business Operations Contributing to the Maintenance of an Orderly Credit System
(1) The Bank of Japan may make advances of limited duration, under special terms and subject to special conditions, to financial institutions that are temporarily unable to meet their payment needs due to problems with their electronic information processing systems or by reason of other accidents.
(2) The Bank of Japan may, upon the request of the Minister of
Finance based on special need, make advances subject to special
conditions, or undertake business operations necessary for the
maintenance of an orderly credit system, within the scope of the
request.
4. Business Operations Contributing to Smooth Payments and Settlements
The Bank of Japan may, with the permission of the Minister of
Finance, undertake business operations contributing to smooth
payments and settlements among financial institutions, together
with the operations referenced in sections 1 and 2.
5. Business Operations Relating to International Finance
(1) The Bank of Japan may buy and sell foreign exchange. In transactions implemented for the purpose of stabilizing the foreign exchange rate of Japan's currency, the Bank shall act as the agent of the Government. For transactions implemented to cooperate with foreign central banks or other foreign public sector entities, the Bank shall undertake such necessary operations upon the request of, or with the permission of, the Minister of Finance.
(2) The Bank of Japan may receive deposits from foreign central banks or other foreign public sector entities, and undertake operations considered to be appropriate yen-dominated asset investment.
(3) The Bank of Japan may, upon the request of, or with the approval
of, the Minister of Finance, provide credit and undertake other
operations on behalf of foreign central banks or other foreign
public sector entities where necessary to cooperate with foreign
central banks or other foreign entities in the area of the international
finance.
6. Other business
The Bank of Japan may, with the permission of the Minister of Finance, undertake other business operations that are not prescribed in this and other law, whenever deemed necessary to achieve the purpose of the Bank of Japan.
7. On-site examination
(1) The Bank of Japan may execute contracts for examinations with financial institutions in order to conduct, and prepare to conduct, its proper operations that maintain orderly credit system.
(2) The Bank shall consider the operational burden imposed on financial institutions when conducting examinations.
(3) The Bank may provide, upon request, reports of examinations
to the Minister of Finance for review.
The Bank of Japan is authorized to issue bank notes. Bank notes issued by the Bank shall have an unlimited circulation for all transactions as legal tender.
Necessary measures shall be taken with respect to matters relating to bank notes.
*[The provisions concerning the maximum limit for issuing bank
notes and the requirement for a reserve of bank notes shall be
eliminated.]
1. Business period
The Bank of Japan's business period shall be one year from April
1 to March 31.
2. Budget for operating expenses
(1) The Bank of Japan shall submit a draft budget of its expenditures (excluding those expenditures which may hinder monetary policy) for each business period to the Minister of Finance, and obtain the Minister's permission prior to the commencement of the business period.
(2) When the Minister of Finance is convinced that the permission referenced in subsection (1) should not be given, he shall provide a notice of rejection and the reason to the Bank, as well as to the public.
(3) Upon receipt of the notice of rejection referenced in subsection
(2), the Bank may state its opinion to the Minister, or make its
opinion public.
3. Financial Statements
Procedures shall be established by which the Bank of Japan prepares
and submits financial statements, (a balance-sheet and a profit
and loss statement) with the opinion of its Auditor, to the Minister
of Finance for his approval.
4. Management of surplus
(1) The Bank of Japan shall set apart five per cent of the surplus of each business period as a reserve fund to cover losses and other items. Where special need exists, the Bank may make a reserve beyond the prescribed limit, with the permission of the Minister of Finance. The Bank also may make dividend payments on the paid-up amount of the capital subscriptions out of surplus, provided that the rate of such dividends may not exceed five per cent per annum.
(2) The Bank of Japan shall, after deducting from surplus the
amount prescribed in subsection (1), pay the remainder to the
Government.
1. Report on the operations
Procedures shall be established by which the Bank of Japan prepares
a report every six months, stating the Policy Board's monetary
policy decisions and the status of its implementations. The report
shall be submitted to the Diet through the Minister of Finance.
2. Public Disclosure of Operational Conditions
The Bank of Japan shall, after each business period, publicly
disclose its financial and operational condition. Such disclosure
shall include financial statements.
1. Correction of misconduct
(1) Where there has been misconduct by the Bank of Japan or its officers or employees, or such is likely to occur, the Minister of Finance may require the Bank to take necessary measures to correct such misconduct.
(2) When the Bank of Japan is required to act pursuant to subsection (1), the Bank shall promptly take corrective actions and other measures the Policy Board considers necessary.
*The broad authority of the Minister of Finance to issue directions
to the Bank of Japan and appoint its Comptroller shall be abolished.)
2. Inspection of the Bank
(1) Where the Bank of Japan or its officers or employees have engaged in misconduct, or are likely to engage in misconduct, the Minister of Finance may require the Auditors of the Bank to investigate such misconduct and other necessary matters, and report the results to the Minister.
(2) When required pursuant to subsection (1), the Bank's Auditors shall promptly conduct the investigation and report the results to the Minister and the Policy Board.
*The power of the Minister to conduct on-site inspection shall be abolished.
(3) The Minister may require the Bank to submit reports or materials,
if he deems it necessary in light of the manner in which the Bank
is executing its business.
1. Penal Code
The Penal Code shall be prescribed to make provisions in this
law effective.
2. Effective Date
This law shall be effective on April 1, 1998.
3. Amendment to the Law Concerning Reserve Deposit Requirement System
The authority of the Minister of Finance to fix, change or abolish
reserve rates shall be eliminated.
4. Amendments to Other Laws
Other relevant statutes and subordinate laws shall be revised
as necessary.