Funding Levels for the New Accounts in the BOJ-NET

The Bank of Japan decided to implement the next-generation RTGS project of the BOJ-NET Funds Transfer System. Under the project, the new system will have liquidity-saving features and will incorporate large-value payments that are currently handled by two private-sector designated-time net settlement systems, the Foreign Exchange Yen Clearing System and the Zengin System. We analyze characteristics of the optimal funding levels under the new features using simulation analysis. We find that the optimal funding levels can be described with the total balances in the system, the distribution of the total balances across participants, and the timing of funding.