The Bank of Japan (Bank of Japan)
At the head of the banking system of Japan is the Central Bank – the Bank of Japan, 55% of whose shares belongs to the state.
Private shareholders in Bank management do not participate. The authorized capital of the Bank of Japan is 100 million yen. The main functions of the Bank of Japan, besides printing money (this is his exclusive right), is part of monetary regulation of the economy, including implementation of international payments, conducting money market operations, cash and Treasury services.
The Bank operates on the basis of the act of 1942, which put it under strict governmental control and gave the Finance Minister the right to change the policy of the Bank of Japan. In 1949 was established the Political Committee (Committee policy). He became the new body, which was determined by the highest interests of the state in financial and monetary spheres. Of the 7 members of 5 the Committee have the right to vote: the President, appointed by Cabinet for a five year term, and one representative from city and regional banks, industry and agriculture (all of them are appointed for 4 years). Two members, without voting rights, representatives of the Ministry of Finance and economic planning Management.
Issues under the jurisdiction of the Political Committee, defined by the Bank act (article 13, item 3). The Committee develops the fundamental course of banking activity and management of the Bank of Japan. His prerogative is to change the level of interest rates, define or modify the types and conditions of promissory notes, is accounted for by the Bank of Japan as well as the types, conditions and appraised value of collateral lending. It defines and modifies the types, terms and cost of facilities when open market operations and the start and end operations.
The political Committee in consultation with the Ministry of Finance decides on the maximum percentage change in the market on the basis of a Temporary law concerning the regulation of interest, with the permission of the Ministry of Finance sets the reserve ratios on the basis of the Law on the system of reserve deposits. The Committee decides on the budget of the Bank of Japan, however, need the permission of the Minister of Finance. In agreement with the Bank of Japan was accountable to Parliament.
The Bank of Japan is headed by the President of the Bank and the Directorate, which includes the Vice presidents of the Bank, advisers to the President, the inspector on supervision of the conduct of Affairs, and the Director.
The Bank of Japan banking licenses, sets the minimum size of the authorized capital of the Bank gives permission to change the corporate name of the Bank, merger of banks, establishment and liquidation of branches. To ensure the Bank’s sustainable liquidity is important to establish the level of coefficients indicating liquidity risk. Such ratios are the norm of equity, which are defined percentages of the Bank’s capital throughout the total capital; rate of liquid assets, showing the ratio of equity and debt for a certain time; the norm of real estate used for commercial purposes; restrictions on granting large loans. The Bank of Japan establishes for obligation banks on provision of reporting documents about their activities.
The instruments of monetary policy the Bank of Japan have undergone a significant evolution. For several postwar decades of such classical instruments as the establishment of user interest, norms of required reserves, open market transactions of the securities did not play a leading role, giving a direct quantitative limitation of the loan in terms of artificially low rate of interest. In the mid-1970s, the situation in Japanese economy has radically changed, following the high economic growth came to a deep and prolonged crisis. With the change of phase of the economic cycle significantly increased the value of monetary regulation of the economy, due, in particular, the strengthening of the position of the state in the credit system.