No 6098
(Law No. 135, l May 27, 1957)
1974
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EHS LAW BULLETIN SERIES
EHS Vol. VI
LAW CONCERNING RESERVE DEPOSIT REQUIREMENT SYSTEM
(Law No. 135, May 27, 1957)
(Purpose)
Article 1. The purpose of this Law is to consolidate the monetary system of this country through establishing the reserve deposit requirement system as a measure for adjusting the amount of currency in circulation and thus contribute to the sound development of the national economy.
(Definition) (3)
Article 2. "Designated financial institutions" as referred to in this Law shall mean those as mentioned in the following (in those as mentioned in items (4) through (9), they shall be limited to those there among as prescribed by Cabinet Order):
(1) The bank having obtained the license under Article 2 of the Banking
Law (Law No. 21 of 1927);
(2) The long-term credit bank as provided for in Article 2 of the Long-term
Credit Bank Law (Law No. 187 of 1952);
(3) The foreign exchange bank as provided for in Article 2 paragraph 1
of the Foreign Exchange Bank Law (Law No. 67 of 1954);
(4) The mutual loans and savings bank;
(5) The credit association;
(6) The federation of credit associations;
(7) The Central Co-operative Bank for Agriculture and Forestry;
(8) The Central Bank for Commercial and Industrial Associations;
(9) The life insurance company having obtained the license under Article
1 paragraph 1 of the Insurance Business Law (Law No. 41 of 1939).
2. "The legal amount of reserve deposit" as referred to in this Law shall mean a minimum amount of deposits with the Bank of Japan, which shall be maintained by the designated financial institutions in accordance with the provisions of this Law.
3. "Designated account" as referred to in this Law shall mean the account pertaining to those mentioned in the following:
(1) Deposit (excluding the deposit falling under item (4) and other
deposits as prescribed by Cabinet Order, and including savings and cumulative
deposit);
(2) Bond as prescribed by Cabinet Order, issued by the designated financial
institutions in accordance with a special law;
(3) Money received by means of trust contracts pertaining to those as prescribed
by Cabinet Order, among money trusts accepted by a bank concurrently engaged
in the trust business whose trust properties of many trustors are jointly
invested;
(4) Obligation as prescribed by Cabinet Order of the designated financial
institutions, such as the foreign currency deposit pertaining to exchange
residents under the provision of Article 6 paragraph 1 item (5) of the
Foreign Exchange and Foreign Trade Control Law (Law No. 228 of 1949), or
the deposit pertaining to exchange non-residents under the provision of
item (6) of said paragraph;
(5) Those as prescribed by Cabinet Order to be similar to the obligations
mentioned in the preceding respective items.
4. "Increased amount of designated accounts" as referred to in this Law shall mean, according to the case as mentioned in the following respective items, the exceeding amount in the event that the balance of respective designated accounts of the designated financial institutions exceeds the amount as mentioned in said respective items:
(1) Where the Bank of Japan fixed the standard day in accordance with
the provision of Article 4:
the balance of said designated account at the closing of its office of
that day;
(2) Where the Bank of Japan fixed the standard period in accordance with
the provision of Article 4:
the amount obtained in dividing by the number of days in the period the
total sum of the balances of said designated accounts at the closing of
its office of every day during the period (if the day is a holiday, it
shall be its previous day; the same in Article 7).
5. "The reserve rate" as referred to in this Law shall mean
the ratio of the legal amount of reserve deposit maintained by the designated
financial institution concerned, to the amount of deposits held by the
said institution (excluding deposits as stipulated by Cabinet Order such
as deposits in foreign currency, but including savings deposits and installment
savings; hereinafter the same).
(Obligation to maintain deposits with the Bank of Japan) (3)
Article 3. In case the Bank of Japan determined a reserve rate
in accordance with the provisions of the following Article, the designated
financial institutions shall maintain a sum of money equal to or more than
the legal amount of reserve deposit calculated according to the method
as prescribed in Article 7 paragraph 1 or 2, in the form of deposits with
the Bank of Japan.
(Establishment, change or abolition of reserve rate, etc.) (3)
Article 4. The Bank of Japan may establish, change or abolish the reserve rate, or the standard day, etc. (meaning the standard day or the standard period pertaining to the increased amount of designated accounts; hereinafter the same) if it deems necessary for the adjustment of the amount of currency.
2. Such reserve rate shall not be in excess of 20 per cent (100 per cent with respect to the reserve rate pertaining to the designated account coming under Article 2 paragraph 3 item (4)).
3. The Bank of Japan shall, when it intends to establish, change or abolish the reserve rate or the standard day, etc. in accordance with the provision of paragraph 1, obtain the approval of the Minister of Finance.
(Ditto) (3)
Article 5. In case the Bank of Japan establishes, changes or abolishes the reserve rate or the standard day, etc. in accordance with the provision of the preceding Article, it may establish, change or abolish such a rate, making discrimination between the designated accounts or the designated financial institutions.
(Public announcement) (3)
Article 6. Establishment, change or abolition of the reserve rate or the standard day, etc. as prescribed in Article 4 shall be made through public announcement by the Bank of Japan.
(Method of calculation of legal amount of reserve deposit, etc.) (3)
Article 7. The legal amount of reserve deposit for any designated financial institution shall be calculated by summing up the balance of respective designated accounts or the increased amount of designated accounts at the closing of its office multiplied by the reserve rate of each day during the month concerned and dividing the total by the number of days of the month. In this case, if the month contains a day or days for which the reserve rate is not determined, calculation shall be made regarding said reserve rate for the particular day or days as zero.
2. If, in the case of the preceding paragraph, the reserve rate pertaining to the balance of the designated account and the reserve rate pertaining to the increased amount of designated account with respect to one designated account of one designated financial institution are both fixed, the amount to be multiplied the reserve rate pertaining to the balance of said designated account in calculating the amount of legal reserve deposit shall be the amount -excluding the increased amount of designated account among the balance of said designated account at the closing of its office of every day as provided for in said paragraph.
3. The amount of deposits with the Bank of Japan maintained by the designated financial institution under the provision of Article 3 shall be calculated by summing up the daily balances deposits with the Bank of Japan at the closing of its office (excluding deposits as stipulated by Cabinet Order) of the said institution each day for one month-period starting from the day in the said month stipulated by Cabinet Order and dividing the total by the number of days of the said period.
(Measure to be taken in case of shortage of deposits) (1) (2) (3)
Article 8. In case the amount of deposits with the Bank of Japan maintained by the designated financial institution calculated in accordance with the provision of paragraph 3 of the preceding Article does not reach the legal amount of reserve deposit calculated in accordance with the provision of paragraph 1 or 2 of the same Article, the said institution shall pay to the Bank of Japan, pursuant to Cabinet Order, a sum of the amount in shortage multiplied by a rate of plus 3.75% to the discount rate of commercial bills of the Bank of Japan on the last day of the month concerned, for the number of days of the month which forms the basis of the calculation of the legal amount of reserve deposit.
2. The Bank of Japan shall pay the amount of money paid in accordance with the provision of the preceding paragraph to the Government pursuant to the provisions of Cabinet Order.
3. The amount of money paid to the Bank of Japan in accordance with the provision of paragraph 1 or the amount of money paid by the Bank of Japan in accordance with the provision of the preceding paragraph shall not be included in the amount of profit or in the amount of loss in computing the amount of income in respective business year under the provisions of the Corporation Tax Law (Law No. 34 of 1965).
(Presentation of report) (3)
Article 9. Designated financial institutions shall submit to the Bank of Japan reports concerning the situation of their designated accounts received or deposits with the Bank of Japan in accordance with the provisions of Cabinet Order.
(Delegation to Cabinet Order)
Article 10. Besides the provisions of this Law, particulars necessary for the enforcement of this Law shall be prescribed by Cabinet Order.
SUPPLEMENTARY PROVISIONS:
1. This Law shall come into force as from the day of its promulgation.
SUPPLEMENTARY PROVISIONS
(Law No. 36, Mar. 31, 1965):
(1)
(Enforcement date)
Article 1. This Law shall come into force as from April l, 1965.
SUPPLEMENTARY PROVISIONS
(Law No. 13, Apr. 1, 1970):
(2)
(Enforcement date)
Article 1. This Law shall come into force as from the day of its promulgation.
SUPPLEMENTARY PROVISIONS
(Law No. 23, May 1, 1972):
(3)
Article 1. This Law shall come into force as from the day of its promulgation.