Trends in the Money Market in Japan(August 2020)Money Market Survey since 2008 to understand developments in the Japanese money market. Initially, this series of surveys was conducted

Trends in the Money Market in Japan Results of the Tokyo Money Market Survey (August 2020)

December 2020

Financial Markets Department

Bank of Japan

Please contact the email address below to request permission before reproducing or

copying the contents of this paper for commercial purposes.

Financial Markets Department, Bank of Japan

E-mail: [email protected]

Please credit the source when reproducing or copying the contents of this paper.

1

December 2020

Financial Markets Department

Bank of Japan

Trends in the Money Market in Japan Results of the Tokyo Money Market Survey (August 2020)

■ Introduction ■

The Financial Markets Department of the Bank of Japan (the Bank) has conducted the Tokyo

Money Market Survey since 2008 to understand developments in the Japanese money market.

Initially, this series of surveys was conducted every other year. However, to observe market

trends more precisely, the Bank decided to conduct the survey annually beginning with the

2013 survey. In August 2020, the 11th survey in the series was carried out (the survey was

conducted as of the end of July 2020).

As with the previous surveys, this survey covers eligible counterparties in the Bank's market

operations, as well as other major participants in the money market. The number of

respondents in the survey was 328 (with a response rate of 100 percent).

The Bank intends to capture comprehensively and from various angles the situations and

structural changes in the money market, utilizing the results of this survey as well as the

results of the Bond Market Survey. The Bank will continue to enhance dialogue with market

participants by taking advantage of the Meeting on Market Operations and the Bond Market

Group Meeting to actively support the relevant parties in their efforts to enhance Japanese

financial markets, including the money market. The Bank intends to contribute significantly

to such endeavors in its capacity as Japan's central bank.

Number of Respondents in the Tokyo Money Market Survey

2019 survey 2020 survey

Total respondents 302 328

Eligible counterparties in the Bank's market operations 274 300

Note: In addition to the eligible counterparties in the Bank's market operations, several major life insurance companies, general insurance companies, and asset management companies participated in the survey (with a response rate of 100 percent).

2

■ Overview ■

The amounts outstanding in the money market increased from the levels of the previous year

on both the cash borrowing side and the cash lending side.1

This was because (1) the newly implemented "Special Funds-Supplying Operations to

Facilitate Financing in Response to the Novel Coronavirus (COVID-19)"2 were actively used

and moves to conduct yen fund transactions with overseas counterparties became widespread,

mainly among foreign banks on the cash borrowing side and (2) there was an increase in

purchases of treasury discount bills (T-Bills) for the purposes of arbitrage trading and

providing collateral amid rises in the yield on T-Bills temporarily exceeding the short-term

policy interest rate of minus 0.1 percent.

With respect to the functioning of the money market (as of the end of July 2020), around 90

percent of all respondents answered that it remained "mostly unchanged." However, with

regard to the period when the state of emergency3 was in place, around 20 percent of

respondents indicated that market functioning had "declined" (see Box 1).

The Bank intends to continue to closely monitor the developments in the money market

through day-to-day monitoring activities, the implementation of the Tokyo Money Market

Survey, and dialogue with market participants.

1 The discrepancies between the figures on the cash lending side and borrowing side are due to

constraints regarding the counterparties covered by this survey (e.g., non-residents are not included), and the fact that some types of transactions are recorded only on one side (e.g., transactions with the Bank are recorded only on the cash borrowing side, while treasury discount bills [T-Bills] are recorded only on the cash lending side).

2 For details, see "Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19)" (https://www.boj.or.jp/en/mopo/measures/mkt_ope/ope_v/index.htm/) on the Bank of Japan's website.

3 This refers to the period from April 7, 2020, when the Japanese government declared a state of emergency, to May 25, when the state of emergency was lifted. The same applies to the remainder of the paper.

3

Amount Outstanding in the Money Market

Cash Borrowing Side Cash Lending Side

29 28

143 143

43 51

4778

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

Transactions with the Bank

CD/CP, CD/CP repos

Yen fund transactions with overseas counterparties

Repo transactions

Call (collateralized/uncollateralized) transactions

tril. yen

29 28

130 123

27 24

17 39

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

T-Bills

CD/CP, CD/CP repos


Repo transactions


tril. yen

4

1. GC Repo Transactions Remained Unchanged from the Previous Year

Of repo market4 transactions, the amount outstanding of general collateral (GC) repos5

remained generally unchanged from the previous year.

On the cash borrowing side, Japanese securities companies pointed out that there was an

increase in funding needs due to an increase in the inventory against the backdrop of the

large-scale increase in the amount of issuance of Japanese government bonds (JGBs) based

on the supplementary budget. Meanwhile, it was pointed out that some city banks saw

temporary decreases in cash borrowing (bond lending) through GC repos as a result of the

increase in bonds pledged as collateral to the Bank in association with the expansion in the

use of the "Special Funds-Supplying Operations to Facilitate Financing in Response to the

Novel Coronavirus (COVID-19)," although there continued to be substantial cash borrowing

need for the purpose of arbitrage trading that took advantage of the three-tier system of

financial institutions' current accounts at the Bank.

On the cash lending side, the overall situation remained unchanged as evidenced by, for

example, the amount outstanding of cash lending using GC repos conducted in combination

with bond lending using SC repos at trust banks remained at the same level as the previous

year.

In addition, the amount outstanding of transactions by securities companies (foreign

securities companies) -- which, in many cases, perform market making for non-residents --

increased somewhat, reflecting non-residents' need to trade JGBs once considering the FX-

swap-implied yen rate from the U.S. dollar.

4 In this paper, the market for securities repurchase (gensaki) transactions and cash-collateralized

securities lending (gentan) transactions is called the "repo market." 5 These are repo transactions in which the securities to be used as collateral are not specified.

5

Amount Outstanding in the GC Repo Market by Investor Type


8 5

2220

2223

30 29

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Others /Securities finance companies

Foreign securities companiesJapanese securities companiesTrust banks

City banks

tril. yen

Tanshi

9 6

11 16

24 25

41 39

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Others /Securities finance companiesForeign securities companiesJapanese securities companiesTrust banksCity banks

tril. yen

Tanshi

6

2. SC Repo Transactions Remained Unchanged from the Previous Year

The amount outstanding of special collateral (SC) repos6 remained more or less unchanged

as a whole from the previous year.

On the bond lending (cash borrowing) side, it was pointed out that the amount outstanding of

bond lending (cash borrowing) using SC repos which are conducted in combination with

bond borrowing (cash lending) using GC repos remained at the same level as the previous

year at trust banks, the main suppliers of bonds. It was also indicated that the GC-SC spread

was subdued during this period, and it was not an environment in which transactions would

become more active.

On the bond borrowing (cash lending) side, securities companies (foreign securities

companies) pointed out that the need for borrowing securities used in the SC repos decreased

as moves by some investors to reduce their positions had been seen since the spread of

COVID-19.

Amount Outstanding in the SC Repo Market by Investor Type

Bond Lending (Cash Borrowing) Side Bond Borrowing (Cash Lending) Side

6 These are repo transactions in which the securities to be used as collateral are specified.

22 23

98

6 8

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Others

/Securities finance companiesForeign securities companies

Japanese securities companiesTrust banks

City banks

tril. yen

Tanshi

9 10

14 10

20

18

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Others

/Securities finance companies

Foreign securities companies

Japanese securities companies

City banks

tril. yen

Tanshi

7

3. Uncollateralized Call Transactions Remained Unchanged from the Previous Year

The amount outstanding of transactions in the uncollateralized call market remained

generally unchanged from the previous year.

On the cash borrowing side, as arbitrage trading that took advantage of the three-tier system

of financial institutions' current accounts at the Bank became established, it was pointed out

that some city banks, regional banks, and regional banks II that had increased unused

allowances of macro add-on balances by using "Special Funds-Supplying Operations to

Facilitate Financing in Response to the Novel Coronavirus (COVID-19)" increased their cash

borrowing for the purpose of arbitrage trading.

On the cash lending side, the amount outstanding remained unchanged as a whole as

evidenced by, for example, that of transactions by investment trusts7 remaining at the same

level as the previous year.

Amount Outstanding in the Uncollateralized Call Market by Investor Type


7 Included in "trust banks" in this survey.

4 5

7 8

45

97

0

5

10

15

20

25

30

11 12 13 14 15 16 17 18 19 20

Others

Securities companies

Regional banks and regional banks II

Trust banks

City banks

tril. yen

18 17

4 3

24

0

5

10

15

20

25

30

11 12 13 14 15 16 17 18 19 20

Others

banks


Trust banks

City banks

tril. yen

Keitou/Shinkin

8

4. Collateralized Call Transactions Remained at Low Levels

The amount outstanding of transactions in the collateralized call market has continued to

be at a significantly low level since the introduction of the negative interest rate policy.

It was pointed out that some collateralized call transactions were suspended or reduced as

a result of focusing on operations with greater urgency and higher priority, as financial

institutions reviewed their operational structures given the spread of COVID-19.

Amount Outstanding in the Collateralized Call Market by Investor Type


0

5

10

15

20

25

11 12 13 14 15 16 17 18 19 20

Others companiesSecurities companiesForeign banksRegional banks and regional banks IICity banks

tril. yen

Tanshi

0

5

10

15

20

25

11 12 13 14 15 16 17 18 19 20

Others

companies


Trust banks

City banks

tril. yen

Tanshi

9

5. Investment in T-Bills and CP Increased

The amounts outstanding of investment in T-Bills and in CP increased from the previous

year.

The amount outstanding of investment in T-Bills increased significantly from the previous

year due to an increase in purchases for the purposes of arbitrage trading or providing

collateral, as the yield on T-Bills temporarily exceeded the short-term policy interest rate of

minus 0.1 percent amid a significant increase in the amount of issuance. By investor type, the

amount outstanding held by city banks has particularly increased.

The amount outstanding of investment in CP increased from the previous year due to an

increase in the amount of issuance of CP reflecting an expansion in firms' cash borrowing

need.

Amount Outstanding of Investment in T-Bills and CP

Amount Outstanding of Investment in T-Bills Amount Outstanding of Investment in CP

11

273

6

0

15

30

45

60

75

11 12 13 14 15 16 17 18 19 20

Others companies

Securities companiesRegional banks and regional banks IITrust banks

City banks

tril. yen

Tanshi

5 5

6 6

4 4

24

0

5

10

15

20

11 12 13 14 15 16 17 18 19 20

Others companies

Securities companiesRegional banks and regional banks IITrust banks

City banks

tril. yen

Tanshi

10

6. Perceptions of Market Participants on the Functioning of the Money Market

With respect to the functioning of the money market, the share of respondents who answered

that it had "declined" was at the same level as the previous year, at around 10 percent, and

over 90 percent of all respondents answered that it remained "mostly unchanged."

By type of transaction, the amount outstanding of both call (uncollateralized and

collateralized) and repo transactions remained generally unchanged from the previous year,

and over 80 percent of all respondents answered that the functioning of market transactions

remained "mostly unchanged."

Perceptions of Market Participants on the Functioning of the Money Market8

8 For "The Money Market," responses were obtained only from those that were engaged in some kind

of contracts for call transactions or JGB repo transactions. For "Uncollateralized Call Transactions," "Collateralized Call Transactions," and "JGB Repo Transactions," responses were obtained only from those that were engaged in uncollateralized call transactions, collateralized call transactions, and contracts for JGB repo transactions, respectively.

7 6 8 103 3

9 9

85 89 8486

9297 83

86

8 4 8 5 50

9 5

0

20

40

60

80

100

19 20 19 20 19 20 19 20The Money Market Uncollateralized Call

TransactionsCollateralized Call

TransactionsJGB Repo Transactions

Improved

Mostly unchanged

Declined

%

11

[BOX 1] Impact of COVID-19 on Functioning and Operations

This box describes the impact of COVID-19 on the functioning of the money market and the

respondents' operations in market divisions.

(1) Functioning of the Money Market

As stated in "6. Perceptions of Market Participants on the Functioning of the Money Market,"

the majority of respondents viewed that the functioning of the money market was generally

unchanged from the previous year. However, around 20 percent of the respondents indicated

that market functioning had "declined" during the period when the state of emergency was in

place (Chart 1).

Of those that indicated that the functioning had "declined," around 40 percent answered that

they decreased the number of transactions, the number of counterparties and the trading

volume (Chart 2). Some of the respondents cited as the background that "the number of

transactions was reduced to streamline workload during the COVID-19 pandemic" and "some

of the arbitrage trading had to be eliminated due to resource constraints." It thus shows that

operational constraints had a certain impact on their transactions.

(2) Responses regarding Business Operations

The respondents experienced significant changes in their business operations in market

divisions due to the spread of COVID-19. A summary of the changes in the market divisions

during the period when the state of emergency was in place and the operational changes after

the state of emergency was lifted is described below by investor type.10

(Chart 1) Functioning during the State of

Emergency9

9 Responses were obtained only from those that were engaged in some kind of contracts for call

transactions or JGB repo transactions during the month of July 2020. The same applies to Chart 2. 10 In Box 1, financial institutions are classified into "major Japanese banks," "regional financial

institutions," and "foreign financial institutions." "Major Japanese banks" refers to city banks, trust

43 41 41

50 55 50

7 5 9

0

20

40

60

80

100

Transactions Counterparties Trading volume

Decreased Unchanged Increased

%

(Chart 2) Changes in Transaction Behavior of Respondents Who Answered "Declined"

22%

76%

2%

Declined Mostly unchanged Improved

12

1. Changes in Working Styles during the State of Emergency

Most respondents in all investor types indicated that some kind of changes in working styles

were implemented (Chart 3).

The respondents who answered that they "reduced the number of personnel working at office"

by enabling employees to work from home accounted for around 60 percent in major Japanese

banks, around 50 percent in regional financial institutions, and around 30 percent in foreign

financial institutions. Regarding this point, some major banks commented that they "first

asked employees to stay at home because it took some time to establish systems or facilities

to enable working from home." Some regional financial institutions stated that they "could

not streamline workload very much because of the constraints on staff and business bases."

Meanwhile, foreign financial institutions mentioned that they "were able to implement

measures relatively early by following the footsteps of their offices overseas, and switched to

working from home without having to ask employees to stay at home."

Regarding the percentage of the respondents who "increased the number of personnel working

at alternative business bases" and "increased the number of personnel working from home,"

that of major Japanese banks and that of foreign financial institutions significantly exceeded

the overall average, while that of regional financial institutions fell below the average.

Regarding this point, some regional financial institutions stated that they "partitioned off the

main office instead of enabling employees to work from home because their business bases

either had only few infections or were not located in the prefectures designated as 'Prefectures

(Chart 3) Changes in Working Styles during the State of Emergency

banks, keitou financial institutions (central organizations of financial cooperatives), securities companies, tanshi companies and securities finance companies, and other financial institutions. "Regional financial institutions" refers to regional banks, regional banks II, and shinkin banks. "Foreign financial institutions" includes branches of foreign banks in Japan and foreign securities companies.

99

64

49

9383

52

20

32

100

31

66

91

88

53

31

51

0

20

40

60

80

100

Took some kind of measures Reduced the number ofpersonnel working at office

Increased the number ofpersonnel working at

alternative business bases

Increased the number ofpersonnel working from

home

Major Japanese banks Regional financial institutions Foreign financial institutions

Overall average

%

13

under Specific Cautions'" and they "were unable to set up a work-from-home environment

due to resource constraints."

2. Status of Operations after the State of Emergency

Many financial institutions have been continuously revising their operational systems even

after the state of emergency was lifted. Their status of operations as of the end of July 2020

are summarized below.

(a) Major Japanese Banks

Around 60 to 70 percent of major Japanese banks stated that at their alternative business bases

they were "able to perform the same or nearly the same operations as at the main office" in

the front, middle, and back offices.11 The percentage of the respondents who provided similar

responses concerning working from home was around 60 to 70 percent for the front and

middle offices, whereas only around 30 percent for the back office. As for the attendance rate

at the main office as of the end of July, they answered "70 percent or more" more often at the

back office than at the front or middle office.

(Chart 4-a) Status of Operations after the State of Emergency Was Lifted

[Alternative business bases12] [Working from home] [Attendance rate13]

11 The sum of "able to perform almost the same operations as at the main office" and "able to perform

nearly the same operations although there are some constraints on facilities, etc." in Chart 4. Area framed by bold lines in the chart. The same applies to the remainder of the paper.

12 In the chart, "same" refers to the percentage of respondents who answered that they were "able to perform almost the same operations as at the main office," "mostly possible" refers to the percentage of respondents who answered that they were "able to perform nearly the same operations although there are some constraints on facilities, etc." and "some constraints" refers to the percentage of respondents who answered that they were "unable to perform many operations due to constraints on facilities, etc." In addition, the figure shown at the top of each bar chart is the total of the three choices, indicating the percentage of respondents who have established alternative business bases or a work-from-home environment. The same applies to the remainder of the paper.

13 Indicates the percentage of attendance at main offices as of the end of July 2020. The same applies to the remainder of the paper.

%

18 11 17

4546

49

20

9

21

83

66

87

0

20

40

60

80

100

Front Middle Back

SameMostly possibleSome constraints

35 3646

42 3739

18 1914

0

20

40

60

80

100

Front Middle Back

Less than 30%More than 30%, less than 50%More than 50%, less than 70%More than 70%

%

6 13 7

5154

27

42 27

59

99 94 93

0

20

40

60

80

100

Front Middle BackSameMostly possibleSome constraints

%

14

(b) Regional Financial Institutions

Less than 20 percent of regional financial institutions stated that they were "able to perform

the same or nearly the same operations as at the main office" at their alternative business bases

in the front, middle, and back offices. Furthermore, the most responses regarding working

from home were that it was "not effective due to constraints on facilities, etc." in all of the

front, middle, and back offices. Many regional financial institutions responded that they

"partitioned off their main offices" or "split work shifts" rather than enabling employees to

work at alternative business bases or from home. As for the attendance rate at main offices as

of the end of July, in contrast with other investor types, more than 90 percent of regional

financial institutions said that it was "70 percent or more" in all of the front, middle, and back

offices.

(c) Foreign Financial Institutions

More than 80 percent of foreign financial institutions stated that at their alternative business

bases and by working from home they were "able to perform the same or nearly the same

operations as at the main offices." As the background, foreign financial institutions stated that

they "were able to respond quickly by following the measures implemented by their overseas

offices, such as those in Europe and the Unites States during the lockdowns." This led only a

few of them to respond that the attendance rate at main offices as of the end of July was "70

percent or more," and a remarkably large number of them to respond that it was "less than 30

percent," compared to other investor types.

(Chart 4-b) Status of Operations after the State of Emergency Was Lifted

[Alternative business bases] [Working from home] [Attendance rate]

4 4 5

16 12 9

1512

25

3428

39

0

20

40

60

Front Middle Back


%

69

33 2634

40 38 35

0

20

40

60

Front Middle BackSameMostly possibleSome constraints

%

93 94 96

0

20

40

60

80

100

Front Middle Back


%

15

As described above, although foreign financial institutions seem to have been able to cover

most of the operations in the front, middle, and back offices by working at alternative business

bases and from home, there were substantial constraints on operations in the back offices of

major Japanese banks and in all of the front, middle, and back offices of regional financial

institutions.

The Bank of Japan seeks to appropriately ascertain the impact of the spread of COVID-19 on

future operations and market functioning by having dialogue with market participants and to

provide support for the initiatives they implement.

(Chart 4-c) Status of Operations after the State of Emergency Was Lifted

[Alternative business bases] [Working from home] [Attendance rate]

5141

51

4341

40

36

997

88

100

0

20

40

60

80

100

Front Middle Back


%

2032

23

6356

57

11 11

94 91 91

0

20

40

60

80

100

Front Middle Back


%

11 620

46

32

34

23

15

17

20

4729

0

20

40

60

80

100

Front Middle Back


%

16

[BOX 2] Impact of Revision of Regulations on Large Credit Providers

This box summarizes the impact of the revision of regulations on large credit providers14

implemented on April 1, 2020, on the money market. The results were as follows.

When asked about methods of investment of short-term funds after the revision, around 70

percent of respondents answered that there was "no particular change" and many respondents

said the overall impact on transactions was not significant (Chart 5). By investor type,

although relatively few securities companies and trust banks (including investment trusts)

answered that "there were changes," a comparatively high number of regional banks and

keitou financial institutions (central organizations of financial cooperatives) answered that

"there were changes."

When the respondents who said there were changes in the methods of investment were asked

about the specific changes, the most frequent response was "uncollateralized call transactions

with large clients decreased." In addition, some respondents answered, "the number of clients

for uncollateralized call transactions increased" (Chart 6). Additionally, respondents who

answered "other" said "the credit limits set for each financial institution were reduced."

(Chart 5) Methods of Investment of Short

-Term Funds after the Revision15

(Chart 6) Changes in Investment Methods by

Respondents Who Answered "Changed"16

14 This refers to revisions of, for example, the Cabinet Orders and Cabinet Office Orders mainly under

the "Cabinet Order for Partial Revision of the Order for Enforcement of the Banking Act" that was promulgated on October 30, 2019, and took effect on April 1, 2020.

15 Responses were obtained only from those that were engaged in some kind of contracts for call transactions or JGB repo transactions during the month of July 2020. "Changed" in the Chart 5 indicates the percentage of respondents who provided responses in Chart 6.

16 Multiple answers were allowed.

71

23

6

23

0 20 40 60 80 100

Uncollateralized calltransactions with large

clients decreased

The number of clients foruncollateralized call

transactions increased

The amount ofcollateralized call and bondrepo transactions increased

Other

%

31%

69%

Changed No particular change

17

Charts

Chart 1 Amount Outstanding in the Money Market 18 Chart 2 Amount Outstanding in the Money Market by Investor Type 19 Chart 3 Amount Outstanding of Fund Lending by Institutions Eligible and Those Not

Eligible for Remuneration 20

Chart 4

Amount Outstanding in the Call Market and the Ratio of Collateralized Transactions

20

Chart 5 Amount Outstanding in the Uncollateralized Call Market by Investor Type 21 Chart 6 Amount Outstanding in the Uncollateralized Call Market and the Ratio of Non-

Group Direct Dealing (DD) Transactions 21

Chart 7 Amount Outstanding in the Uncollateralized Call Market by Term 22 Chart 8 Number of Credit Lines Established 22 Chart 9 Amount Outstanding in the Collateralized Call Market by Investor Type 23 Chart 10 Amount Outstanding in the Collateralized Call Market by Term 23 Chart 11 Frequency of Call Transactions 24 Chart 12 Amount Outstanding in the Repo Market 25 Chart 13 Amount Outstanding in the Repo Market by Settlement Type 26 Chart 14 Amount Outstanding in the GC Repo Market by Investor Type 27 Chart 15 Amount Outstanding in the GC Repo Market by Term 27 Chart 16 Amount Outstanding in the GC Repo Market by Starting Date 28 Chart 17 Amount Outstanding in the SC Repo Market by Investor Type 29 Chart 18 Amount Outstanding in the SC Repo Market by Term 30 Chart 19 Frequency of Repo Transactions 30 Chart 20 Amount Outstanding of Investment in T-Bills and CP 31 Chart 21 Amount Outstanding of Japanese Yen Fund Transactions with Overseas

Counterparties by Investor Type 32

Chart 22 Yen Overnight Index Swap Market 33 Chart 23 Amount Outstanding in the Equity Repo Market 34 Chart 24 Impact of COVID-19 35 Chart 25 Efforts to Shorten the JGB Settlement Cycle 39 Chart 26 Perceptions of Market Participants on Money Market Transactions 40 Chart 27 Degree of Concentration in Each Market 42

18

Chart 1: Amount Outstanding in the Money Market


Note: 1. Among call transactions, the figures for uncollateralized call transactions are calculated as total transactions through tanshi companies (money market brokers) and direct dealing (DD) transactions (only those made outside of the group; the same applies to the remainder of the paper unless otherwise specified).

2. Transactions with the Bank denote Funds-Supplying Operations against Pooled Collateral, Purchase/Sale of Japanese Government Securities with Repurchase Agreements, Purchases of CP with Repurchase Agreements, Funds-Supplying Operations to Support Financial Institutions in Disaster Areas, Funds-Supplying Operations to Support Financial Institutions in Disaster Areas of the 2016 Kumamoto Earthquake, Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19), Provisioning Measure to Support Strengthening the Foundations for Economic Growth, Fund-Provisioning Measure to Stimulate Bank Lending and Complementary Lending.

3. The discrepancies between the figures on the cash lending side and borrowing side are due to constraints regarding the counterparties covered by this survey (e.g., non-residents are not included), and the fact that some types of transactions are recorded only on one side (e.g., transactions with the Bank are recorded only on the cash borrowing side, while treasury discount bills [T-Bills] are recorded only on the lending side).

29 28

143 143

43 51

4778

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

Transactions with the Bank

CD/CP, CD/CP repos


Repo transactions


tril. yen

29 28

130 123

27 24

17 39

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

T-Bills

CD/CP, CD/CP repos


Repo transactions


tril. yen

19

Chart 2: Amount Outstanding in the Money Market by Investor Type


56 69

3738

60

65

56

53

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

Others companiesSecurities companies banksForeign banksRegional banks and regional banks IITrust banksCity banks

tril. yen

Tanshi

Keitou/Shinkin

28 42

5957

5660

5347

0

50

100

150

200

250

300

350

11 12 13 14 15 16 17 18 19 20

Others companiesSecurities companies banksForeign banksRegional banks and regional banks IITrust banksCity banks

tril. yen

Tanshi

Keitou/Shinkin

20

Chart 3: Amount Outstanding of Fund Lending by Institutions Eligible and Those Not Eligible for Remuneration

Institutions Eligible for Remuneration Institutions Not Eligible for Remuneration

Note: "Institutions Eligible for Remuneration" refer to respondents eligible for the Complementary Deposit Facility. "Institutions Not

Eligible for Remuneration" refer to respondents not eligible for the facility.

Chart 4: Amount Outstanding in the Call Market and the Ratio of

Collateralized Transactions

Note: Cash borrowing side.

26 26

3 2

0

20

40

60

80

0

10

20

30

40

11 12 13 14 15 16 17 18 19 20

Collateralized call transactions

Uncollateralized call transactions

Ratio of collateralized call transactions (right-hand scale)

tril. yen %

106 103

22 19

13 33

0

50

100

150

200

250

11 12 13 14 15 16 17 18 19 20

T-Bills

CD/CP, CD/CP repos


Repo transactions


tril. yen

21 21

2520

1211

0

20

40

60

80

100

11 12 13 14 15 16 17 18 19 20

T-Bills

CD/CP, CD/CP repos


Repo transactions


tril. yen

21

Chart 5: Amount Outstanding in the Uncollateralized Call Market by Investor Type


Chart 6: Amount Outstanding in the Uncollateralized Call Market and the

Ratio of Non-Group Direct Dealing (DD) Transactions

Note: Cash borrowing side.

4 5

7 8

45

97

0

5

10

15

20

25

30

11 12 13 14 15 16 17 18 19 20

Others



Trust banks

City banks

tril. yen

8 10

18 16

0

20

40

60

80

100

0

5

10

15

20

25

30

11 12 13 14 15 16 17 18 19 20

DD transactions

Transactions through companies

Ratio of DD transactions (right-hand scale)

tril. yen %

Tanshi

18 17

4 3

24

0

5

10

15

20

25

30

11 12 13 14 15 16 17 18 19 20

Others

banks


Trust banks

City banks

tril. yen

Keitou/Shinkin

22

Chart 7: Amount Outstanding in the Uncollateralized Call Market by Term


Note: Includes intra-group transactions.

Chart 8: Number of Credit Lines Established

Note: Number of respondents whose total number of credit lines established could be confirmed for all years from 2008 to 2020. Adjusted for the effects of mergers and other factors.

19 20

0

10

20

30

40

50

60

70

80

0

5

10

15

20

25

30

35

40

14 15 16 17 18 19 20

Open-endedOver three monthsOver one month and up to three monthsOver one week and up to one monthOne week or lessOvernightRatio of overnight (right-hand scale)

tril. yen %

19 20

0

10

20

30

40

50

60

70

80

0

5

10

15

20

25

30

35

40

14 15 16 17 18 19 20


tril. yen %

0

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

July 2008=100

23

Chart 9: Amount Outstanding in the Collateralized Call Market by Investor Type


Chart 10: Amount Outstanding in the Collateralized Call Market by Term


0

20

40

60

80

100

0

5

10

15

20

25

14 15 16 17 18 19 20


tril. yen %

0

20

40

60

80

100

0

5

10

15

20

25

14 15 16 17 18 19 20


%tril. yen

0

5

10

15

20

25

11 12 13 14 15 16 17 18 19 20

Others companiesSecurities companiesForeign banksRegional banks and regional banks IICity banks

tril. yen

Tanshi

0

5

10

15

20

25

11 12 13 14 15 16 17 18 19 20

Others

companies


Trust banks

City banks

tril. yen

Tanshi

24

Chart 11: Frequency of Call Transactions

Note: The percentage of respondents is indicated by contract frequency for call transactions.

62 65 61 60

91 92 96 96

0

20

40

60

80

100

19 20 19 20 19 20 19 20Uncollateralized call(cash borrowing side)

Uncollateralized call(cash lending side)

Collateralized call(cash borrowing side)

Collateralized call(cash lending side)

No transactions

Less than a few times amonth

A few times a month

A few times a week

Almost every businessday

%

25

Chart 12: Amount Outstanding in the Repo Market

By Transaction Type


By Contract Type

GC Repos SC Repos

98 99

44 44

0

20

40

60

80

100

120

140

160

11 12 13 14 15 16 17 18 19 20

SC repos GC repos

tril. yen

26 23 26 23

43 47 3432

29 30

27 29

0

20

40

60

80

100

120

17 18 19 20 17 18 19 20Cash borrowing side Cash lending side

Cash-collateralized securities lending transactions

Securities repurchase transactions (prior collateralallocation)Securities repurchase transactions (subsequent collateralallocation)

tril. yen

25 26 28 29

2012

17 15

0

10

20

30

40

50

60

17 18 19 20 17 18 19 20Bond borrowing side Bond lending side

Cash-collateralized securities lending transactions

Securities repurchase transactions

tril. yen

86 85

44 39

0

20

40

60

80

100

120

140

160

11 12 13 14 15 16 17 18 19 20

SC repos GC repos

tril. yen

26

Chart 13: Amount Outstanding in the Repo Market by Settlement Type


Note: "Centrally cleared" refers to transactions cleared by Japan Securities Clearing Corporation (JSCC).

99 89

44 54

0

10

20

30

40

50

60

70

80

0

20

40

60

80

100

120

140

160

14 15 16 17 18 19 20

Not centrally cleared

Centrally cleared

Ratio of centrally cleared (right-hand scale)

tril. yen %

100 90

30 33

0

10

20

30

40

50

60

70

80

0

20

40

60

80

100

120

140

160

14 15 16 17 18 19 20

Not centrally cleared

Centrally cleared

Ratio of centrally cleared (right-hand scale)

tril. yen %

27

Chart 14: Amount Outstanding in the GC Repo Market by Investor Type


Chart 15: Amount Outstanding in the GC Repo Market by Term


36 38

2324

32 29

0

20

40

60

80

100

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Open-ended

Over one month

Over one week and up to one month

One week or less

Overnight

Ratio of overnight (right-hand scale)

tril. yen %

29 33

1718

32 28

0

20

40

60

80

100

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Open-ended

Over one month


One week or less

Overnight


tril. yen %

9 6

11 16

24 25

41 39

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Others /Securities finance companiesForeign securities companiesJapanese securities companiesTrust banksCity banks

tril. yen

Tanshi

8 5

2220

2223

30 29

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

Others




Trust banks

City banks

tril. yen

Tanshi

28

Chart 16: Amount Outstanding in the GC Repo Market by Starting Date

Overnight Transactions


Term Transactions


32 36

0

10

20

30

40

50

0

10

20

30

40

50

11 12 13 14 15 16 17 18 19 20

T+3 and over

T+2 (S/N)

T+1 (T/N)

T+0 (O/N)

T+0 (O/N) ratio (right-hand scale)

%tril. yen

26 31

0

10

20

30

40

50

0

10

20

30

40

50

11 12 13 14 15 16 17 18 19 20

T+3 and over

T+2 (S/N)

T+1 (T/N)

T+0 (O/N)

T+0 (O/N) ratio (right-hand scale)

%tril. yen

3429

1922

99

0

10

20

30

40

50

60

70

14 15 16 17 18 19 20

T+3 and over T+2 T+1 T+0

tril. yen

3430

16

14

6

8

0

10

20

30

40

50

60

70

14 15 16 17 18 19 20

T+3 and over T+2 T+1 T+0

tril. yen

29

Chart 17: Amount Outstanding in the SC Repo Market by Investor Type

Bond Borrowing Side Bond Lending Side

9 10

14 10

20

18

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Others




City banks

tril. yen

Tanshi

22 23

98

6 8

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Others




Trust banks

City banks

tril. yen

Tanshi

30

Chart 18: Amount Outstanding in the SC Repo Market by Term

Bond Borrowing Side Bond Lending Side

Note: From the 2014 survey, "one month or less" has been subdivided into "one week or less" and "over one week and up to one month."

Chart 19: Frequency of Repo Transactions

Note: The percentage of respondents is indicated by contract frequency for repo transactions.

71 7385 87 90 91

74 77

0

20

40

60

80

100

19 20 19 20 19 20 19 20GC repos

(cash borrowing side)GC repos

(cash lending side)SC repos

(bond borrowing side)SC repos

(bond lending side)

No transactions

Less than a few times amonth

A few times a month

A few times a week

Almost every businessday

%

128

11

5

14

19

7

6

0

10

20

30

40

50

60

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Over one month

One month or less


One week or less

Overnight


tril. yen %

11 9

9

4

15

19

10 12

0

10

20

30

40

50

60

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Over one month

One month or less


One week or less

Overnight


tril. yen %

31

Chart 20: Amount Outstanding of Investment in T-Bills and CP

Amount Outstanding of Investment in T-Bills Amount Outstanding of Investment in CP

11

273

6

0

15

30

45

60

75

11 12 13 14 15 16 17 18 19 20

Others

companies



Trust banks

City banks

tril. yen

Tanshi

5 5

6 6

4 4

24

0

5

10

15

20

11 12 13 14 15 16 17 18 19 20

Others

companies



Trust banks

City banks

tril. yen

Tanshi

32

Chart 21: Amount Outstanding of Japanese Yen Fund Transactions with Overseas Counterparties by Investor Type

Japanese Yen Borrowing Side Japanese Yen Lending Side

Note: The total of yen lending/borrowing through FX swaps, euroyen transactions, and with overseas branches and overseas group companies of financial institutions. Excludes transactions with institutional investors and business companies, and other linked transactions.

712

18

24

8

2

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20

Others



Foreign banks

City banks

tril. yen

4 5

42

0

10

20

30

40

50

60

11 12 13 14 15 16 17 18 19 20OthersForeign securities companiesJapanese securities companies banksForeign banksRegional banks and regional banks IITrust banksCity banks

tril. yen

Keitou/Shinkin

33

Chart 22: Yen Overnight Index Swap Market

Volume and Number of Yen OIS Transactions via Brokers

Amount Outstanding in the Yen OIS Market

Source: Money Brokers Association. Note: Includes transactions by overseas offices of financial institutions. On the basis of notional amounts.

16 18

3034

22 15

0

10

20

30

40

50

60

70

80

90

100

11 12 13 14 15 16 17 18 19 20

With clients

With banks/securities companies (via brokers)

With banks/securities companies (DD)

tril. yen

0

20

40

60

80

100

120

140

160

180

0

1

2

3

4

5

6

7

8

Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

Amounts

Number of transactions (right-hand scale)

transactionstril. yen

34

Chart 23: Amount Outstanding in the Equity Repo Market

By Investor Type


Note: Excludes the institutional credit trading, general margin trading, and equity lending between a financial instruments business operator and a securities finance company. The same applies to the next chart.

By Settlement Type


Note: "Centrally cleared" refers to transactions cleared at JASDEC DVP Clearing Corporation.

89

2

2

8

8

0

5

10

15

20

14 15 16 17 18 19 20

Others



Trust banks

tril. yen

8 10

10

10

0

5

10

15

20

15 16 17 18 19 20

Not centrally cleared Centrally cleared

tril. yen

810

4

4

0

5

10

15

20

15 16 17 18 19 20

Not centrally cleared Centrally cleared

tril. yen

45

8

8

0

5

10

15

20

14 15 16 17 18 19 20

Others

/Securities financing companies



tril. yen

Tanshi

35

Chart 24: Impact of COVID-19

<Perceptions of Market Participants on the Functioning of the Money Market>

【 During the State of Emergency】

【 After the State of Emergency Was Lifted】

Note: For "The Money Market," responses were obtained only from those that were engaged in some kind of contracts for call

transactions or JGB repo transactions. For "Uncollateralized Call Transactions," "Collateralized Call Transactions," and "JGB

Repo Transactions," responses were obtained only from those that were engaged in uncollateralized call transactions,

collateralized call transactions, and contracts for JGB repo transactions, respectively.

<Work Measures during the State of Emergency (Overall Average)>

2 2 0 1

22

70 7288

68

54

20 15

12

23 14

9 100

9 10

0

20

40

60

80

100

The MoneyMarket

UncollateralizedCall Transactions

CollateralizedCall Transactions

JGB RepoTransactions

CP/CP RepoTransactions

Improved to almost the same level, or to alevel higher than that at the end-Jan. 2020

Improved, but at a level lower than that atthe end-Jan. 2020

Mostly unchanged

Declined

%

88

53

31

51

0

20

40

60

80

100

Took some kind of measures Reduced the number of personnelworking at office

Increased the number ofpersonnel working at alternative

business bases

Increased the number ofpersonnel working from home

%

22 193

2820

76 8097

72

66

2 1 0 114

0

20

40

60

80

100

The MoneyMarket

UncollateralizedCall Transactions

CollateralizedCall Transactions

JGB RepoTransactions

CP/CP RepoTransactions

Improved

Mostly unchanged

Declined

%

36

<Status of Operations during the State of Emergency (Overall Average)>

【Alternative Business Bases】

【Working from Home】

9 7 10

1613

12

6

39

6977

69

0

20

40

60

80

100

Front Middle Back

No alternative business bases or nopersonnel working at alternative businessbases

Unable to perform many operations dueto constraints on facilities, etc.

Able to perform nearly the sameoperations as at the main office althoughthere are some constraints on facilities,etc.

Able to perform almost the sameoperations as at the main office

%

4 7 4

2023

11

2823

34

48 48 52

0

20

40

60

80

100

Front Middle Back

No system established for working fromhome or no personnel working fromhome

Unable to perform many operations dueto constraints on facilities, etc.

Able to perform nearly the sameoperations as at the main office althoughthere are some constraints on facilities,etc.Able to perform almost the sameoperations as at the main office

%

37

<Changes in Trading Behavior during the State of Emergency>

Note: Responses were obtained only from those engaged in some kind of contracts for call transactions or JGB repo

transactions.

<Percentage of Attendance at Main Offices as of End of July (Overall Average)>

4 3 614

76 82 78

78

19 15 168

0

20

40

60

80

100

Transactions Counterparties Trading volume Term

Decreased (shortened)

Unchanged

Increased (lengthened)

%

72 73 78

18 1514

0

20

40

60

80

100

Front Middle Back

Less than 30%

More than 30%, less than 50%

More than 50%, less than 70%

More than 70%

%

38

< Operations After the State of Emergency Was Lifted (Overall Average)>

【 Alternative Business Bases】

【Working from Home】

Note: As of July 31, 2020.

12 10 13

2522

21

15

10

22

4858

44

0

20

40

60

80

100

Front Middle Back

No alternative business bases

Unable to perform many operations dueto constraints on facilities, etc


%

4 8 4

2223

12

33 24

37

42 45 47

0

20

40

60

80

100

Front Middle Back

No system established for working fromhome

Unable to perform many operations dueto constraints on facilities, etc


%

39

Chart 25: Efforts to Shorten the JGB Settlement Cycle

Change in the Contract Timing of Repos before and after the Implementation of the T+1 Cycle

GC Repos SC Repos

Note: Respondents that engaged in repo contracts at each point in time were asked to indicate any perceived changes in the contract timing of repos. The results are weighted averages of the amount outstanding of transactions as of the end of July 2018 for "Before T+1" and "At the time of the 9th survey," as of the end of July 2019 for "At the time of the previous survey," and as of the end of July 2020 for "At the time of this survey."

0

10

20

30

40

50

60

70

AM PM AM PM AM PM

S-2 S-1 S

Before T+1At the time of the 9th surveyAt the time of the previous surveyAt the time of this survey

%

0

10

20

30

40

50

60

70

AM PM AM PM AM PM

S-2 S-1 S

Before T+1At the time of the 9th surveyAt the time of the previous surveyAt the time of this survey

%

40

Chart 26: Perceptions of Market Participants on Money Market Transactions

Money Market

【Functioning】【Profitability】

Note: 1. Responses were obtained only from those counterparties that were engaged in call money transactions or JGB repo transactions, or in both of them.

2. The question on "Functioning" was designed to find the perceptions of market participants on the change in the functioning of the money market from the previous year, mainly taking into account whether respondents were able to make transactions with intended rates, prices, terms, and counterparties. The same applies to the following results.

3. The question on "Profitability" was designed to find the perceptions of market participants on the change in profitability in the money market from the previous year, mainly taking into account investment yield, funding cost, transaction amounts, and fixed cost. Responses also include those from counterparties who posted losses in their total money market transactions. It is considered that they answered "improved (declined)" when their losses shrank (or expanded) from the previous year. The same applies to the results that follow.

JGB Repo Transactions


Note: Reponses were obtained only from those that were engaged in JGB repo transactions.

7 6

85 89

8 4

0

20

40

60

80

100

19 20

Improved Mostly unchanged Declined%

27 31

62 58

10 11

0

20

40

60

80

100

19 20


9 9

83 86

9 5

0

20

40

60

80

100

19 20


36 37

50 50

14 12

0

20

40

60

80

100

19 20


41

Uncollateralized Call Transactions


Note: Reponses were obtained only from those that were engaged in uncollateralized call transactions.

Collateralized Call Transactions


Note: Reponses were obtained only from those that were engaged in collateralized call transactions.

8 10

84 86

8 5

0

20

40

60

80

100

19 20


2236

62

53

15 10

0

20

40

60

80

100

19 20


3 3

92 97

5 0

0

20

40

60

80

100

19 20


14 9

81 91

5 0

0

20

40

60

80

100

19 20


42

Chart 27: Degree of Concentration in Each Market

Call Market: Cash Borrowing Side Call Market: Cash Lending Side

Repo Market: Bond Borrowing Side Repo Market: Bond Lending Side

0

20

40

60

80

100

0 10 20

Shar

e in

cum

ulat

ive

amou

nts o

utst

andi

ng

Percentage of respondents

2020 GC repos

2019 GC repos

2020 SC repos

2019 SC repos

%

%

0

20

40

60

80

100

0 10 20

Shar

e in

cum

ulat

ive

amou

nts o

utst

andi

ng


2020 GC repos

2019 GC repos

2020 SC repos

2019 SC repos

%

%

0

20

40

60

80

100

0 10 20 30

Shar

e in

cum

ulat

ive

amou

nts o

utst

andi

ng


2020 Uncollateralized calls


2020 Collateralized calls


%

%

0

20

40

60

80

100

0 10 20 30Sh

are

in c

umul

ativ

e am

ount

s out

stan

ding






%

%

Documents

Trends in the Money Market in Japan(August 2020)Money Market Survey since 2008 to understand developments in the Japanese money market. Initially, this series of surveys was conducted