Monetary management in the country.
Through the Bank of Japan, Ministry of Finance, Federation of economic organizations (“Keidanren”).
Basic methods of regulation: setting standards of loan interest, administrative measures, undertaken jointly with the government through the monetary system, the system of required reserves, open market transactions and foreign exchange. If, prior to the 1970s was dominated by administrative forms of regulation, their value is further decreased, and the role of market-valuation methods has increased. In connection with the General shift to neo-conservative economic course in credit and banking sphere (the 1981 act) of the state administrative control over activity of banks was somewhat weakened. However, in the hands of the state were left lending to sectors and projects with high business risk and low profitability, and that the measures adopted meant not the abolition of the system of state regulation, but only its partial restructuring.
The easing of tensions on the capital market, its internationalization, and the emergence of alternatives in the form of rising stock market largely eliminated the economic basis of objective administrative regulation and forced the Bank of Japan to reconsider its attitude to the traditional classical instrumentation. Increased flexibility of interest rates, the discount rate was increased to market levels. Since 1971, the Bank of Japan began operations in the bill market, and further proceeded to active operations with bonds of state loans by going to the system of public subscription. Was formed the securities market and the government started massive operations on other markets short term capital.
The Bank of Japan called the “Bank of banks”, he is a partner on the conclusion of transactions for private financial institutions, enterprises and individuals. He can keep deposits from private financial institutions, so-called system of reserve deposits (introduced in 1957). A financial institution that has acceded to this system, are obliged to Deposit in the Bank of Japan on your current account a certain amount of reserve deposits. In cases where the financial institutions don’t have enough cash), they appeal to the Bank of Japan, which provides them with loans. The percentage on them is determined by the level of official interest rates.