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Compliance Procedures in Banking: A Look at Japan’s Efforts

Introduction

In a bid to ensure the stability of the financial system, the Bank of Japan (BOJ) has conducted a self-assessment of its compliance with core principles for systically important payment systems. The report highlights the bank’s efforts to promote safety and efficiency in Japan’s overall payment and settlement system.

Background

The Bank for International Settlements (BIS) published the Core Principles for Systically Important Payment Systems in January 2001, which sets out ten core principles and four responsibilities for central banks. These principles emphasize the importance of systically important payment systems in maintaining financial stability and preventing disruptions to the overall financial system.

The BOJ-NET Funds Transfer System

The BOJ-NET Funds Transfer System is a systically important payment system operated by the Bank of Japan, which settles large-value interbank payments, including money market transactions and cash legs of trades. The system processes over 19,000 daily average payments worth more than 73 trillion yen, making it critical for maintaining financial stability.

Compliance with Core Principles

The Bank of Japan has conducted a thorough self-assessment to ensure compliance with the Core Principles and Responsibilities. According to the report, the BOJ-NET Funds Transfer System complies with all ten core principles and the bank fulfills its four responsibilities. The bank will continue to monitor developments in the payment and settlement system and update its self-assessment as necessary.

Strategy for Promoting Compliance

The Bank of Japan’s efforts to promote compliance with the Core Principles are part of its broader strategy to ensure the safety and efficiency of Japan’s overall financial system. The bank operates an interbank funds transfer system, BOJ-NET Funds Transfer System, and also oversees payment systems it does not operate as part of its activities for ensuring the safety and efficiency of Japan’s overall payment and settlement system.

Transparency and Accountability

The Bank’s self-assessment report is a significant step towards promoting transparency in its roles and policies in the field of payment and settlement. The bank believes that publicly reporting its compliance with the Core Principles will enhance its accountability and commitment to maintaining financial stability.

Conclusion

In conclusion, the Bank of Japan’s efforts to comply with the Core Principles for Systically Important Payment Systems are a testament to its commitment to ensuring the safety and efficiency of Japan’s overall payment and settlement system. The bank’s self-assessment report provides a detailed overview of its compliance with the Core Principles and Responsibilities, highlighting its efforts to promote transparency and accountability in the financial sector.