Reduction of Foreign Currency Funding Costs

At present, when the Japanese government makes remittances for payments overseas, the Bank of Japan, which handles cash in the Exchequer, delivers the necessary cash in yen and has private financial institutions make the remittances in the foreign currency. The government needs to pay the cost equivalent to the currency conversion fees for these remittances.

From April this year, the Bank of Japan will raise US dollars, which make up the majority of foreign currency remittances, from the foreign exchange fund without currency conversion fees. The Bank of Japan will then deliver the necessary amount in U.S. dollars to private financial institutions and have them make the remittances in dollars. The government can save the cost equivalent to the currency conversion fees by this scheme. Ministry of Finance Japan

This scheme will be implemented from April 2007, beginning with large remittances of US$1 million or more. (The scheme will be applied to small remittances of less than US$1 million as soon as the necessary system has been created.)