Bank of Japan takes further action on repo market
26 March 2020 Japan
Image: Shutterstock
The Bank of Japan (BoJ) is seeking to maintain stability in repo markets by expanding its securities lending programme in response to the tightening supply of Japanese government securities (JGSs).
Increasing demand for JGSs coupled with dwindling supply, has led to the central bank to make its entire stock of securities available to lend.
The BoJ will also relax the upper limit on the number of JGS issues allowed for the submission of bids for its Securities Lending Facility (SLF).
Between 25 March and 30 April, BoJ will raise the upper limit on the number of JGS issues allowed for the submission of bids by a counterparty per auction, from 20 issues to 30 issues.
The move comes after the country's repo rate dropped to minus 0.88 percent earlier in the week.
The expansion to the lending facility is the latest adjustment the BoJ has applied to mitigate market disruption fuelled by the COVID-19 pandemic.
Earlier in March, the central bank increased its purchasing of Japanese government bonds.
Elsewhere, the BoJ is to enhance the provision of liquidity via the standing US dollar liquidity swap line agreements.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank have agreed to increase the frequency of seven-day maturity operations from weekly to daily.
These daily operations took effect on Monday this week.
Increasing demand for JGSs coupled with dwindling supply, has led to the central bank to make its entire stock of securities available to lend.
The BoJ will also relax the upper limit on the number of JGS issues allowed for the submission of bids for its Securities Lending Facility (SLF).
Between 25 March and 30 April, BoJ will raise the upper limit on the number of JGS issues allowed for the submission of bids by a counterparty per auction, from 20 issues to 30 issues.
The move comes after the country's repo rate dropped to minus 0.88 percent earlier in the week.
The expansion to the lending facility is the latest adjustment the BoJ has applied to mitigate market disruption fuelled by the COVID-19 pandemic.
Earlier in March, the central bank increased its purchasing of Japanese government bonds.
Elsewhere, the BoJ is to enhance the provision of liquidity via the standing US dollar liquidity swap line agreements.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank have agreed to increase the frequency of seven-day maturity operations from weekly to daily.
These daily operations took effect on Monday this week.
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