Terms explained: the Bank of Japan's operations and how counterparties are chosenWhat are the Bank of Japan's dealings with banks?
On October 28 the Bank of Japan published the results of its fiscal 2026 public invitation for counterparties to money market operations, together with the list of counterparties for each operation. Operations, also called open market operations, are the means by which the Bank carries out monetary policy, and the financial institutions on the other side of them are chosen through a public invitation and a selection process. Here is what the published material says about the kinds of operations and how the counterparties are decided.
- ○Applies: Funds-supplying operations against pooled collateral (head office and all branches)
- ○Applies: Outright purchases and sales of government bonds
- ○Applies: Treasury discount bill operations and government bond repo operations
- ○Applies: Repo purchases of commercial paper and similar instruments
- ○Applies: Sales of bills
- ○Applies: US dollar funds-supplying operations
Key points
- The October 28 release, from the Financial Markets Department, is titled as the results of the fiscal 2026 public invitation for counterparties to money market operations, and it published the list of counterparties for each operation
- The operations the Bank lists as instruments of monetary policy include funds-supplying operations against pooled collateral, repo operations in government bonds, outright purchases and sales of treasury discount bills, repo purchases of commercial paper, outright purchases of government bonds, sales of bills, and the securities lending facility for government bonds
- Counterparties are publicly invited and selected for operations against pooled collateral (head office and all branches), outright purchases and sales of government bonds, treasury discount bill and government bond repo operations, the securities lending facility, repo purchases of commercial paper and similar instruments, sales of bills, US dollar funds-supplying operations, operations relating to the loan support programme, operations supporting financial institutions in disaster-hit areas, and operations addressing climate change
- The invitation comes in a regular form, held for each fiscal year, and an occasional form, and the creditworthiness requirements applied at selection are also published
- The foreign currency funds-supplying operations listed cover the US dollar, the Canadian dollar, the British pound, the euro and the Swiss franc
What to do in practice
- When you see a reference to a Bank of Japan operation, check which kind of operation is meant: outright purchases of government bonds and short-term supplies of funds are different things
- Whether your own bank is a counterparty can be checked against the lists the Bank of Japan publishes
The Bank of Japan exchanges money and government bonds with banks and other institutions in order to adjust how much money is going around and how interest rates stand. These exchanges are called operations, or open market operations. The institutions on the other side are not just anyone: they apply, and then they are selected. On October 28 the Bank published the list of the counterparties for fiscal 2026.
- (1) InviteThe Bank of Japan publicly invites institutions to be counterparties to its operations
- (2) ApplyBanks and other institutions apply
- (3) SelectThe Bank checks them against published conditions, such as creditworthiness, and selects them
- (4) PublishThe list of those selected is published (the fiscal 2026 list on October 28)
Points
- An operation is the Bank of Japan exchanging money or government bonds with banks and others, to adjust how much money is around and how interest rates stand
- The financial institutions taking part are chosen from those that apply, and the conditions for choosing them are published too
- On October 28 the list of counterparties for fiscal 2026 was published
What the words mean
- operation
- the Bank of Japan exchanging money or government bonds with banks and others; also called an open market operation
- government bond
- the certificate a country issues when it borrows money
- Bank of Japan: Bank of Japan, Results of the fiscal 2026 public invitation for counterparties to money market operations (October 28, 2026)
- Bank of Japan: Bank of Japan, Public invitation and selection of counterparties for operations
- Bank of Japan: Bank of Japan, Open market operations
Economic news presents published statistics and outlooks. It is not investment solicitation or trading advice. Figures are as of publication and may be revised.
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.