BOJ-NET Funds Transfer System and RTGS settlement

Wiki route

This entry sits under money-market index. Read it against Call market structure and repo transaction structures for the markets whose cash legs settle across this rail, and BoJ open market operations for how the central bank supplies and absorbs the reserves that flow through it. The institutional owner is the BoJ Payment and Settlement Systems Department.

TL;DR

The BOJ-NET Funds Transfer System (BOJ-NET FTS) is the Bank of Japan’s online network for settling yen payments across current accounts (当座預金) held at the BoJ. It is the settlement floor under Japan’s money market: when a call loan is repaid, a repo cash leg moves, or a BoJ operation injects funds, the cash ultimately moves as a transfer between BoJ current accounts over BOJ-NET.

Two structural facts define it:

RTGS is the sole settlement mode. Payment instructions are processed immediately and individually (real-time gross settlement) provided sufficient funds are available — there is no end-of-day net settlement of these flows.
BoJ current accounts are the settlement asset. The same accounts hold the reserves / excess balances that the complementary deposit facility pays interest on, linking the plumbing (settlement) to the price (the rate floor).

For FinWiki, this is the page that answers “where does the cash actually go” for every money-market transaction, and it fills the INDEX backlog note on BoJ current-account access.

What BOJ-NET Settles

Flow	Settles across BOJ-NET because…
[[money-market/call-market-structure	Call loans]]
[[money-market/japan-repo-transaction-structures-gensaki-cash-collateralized-securities-lending	JGB repo]] cash legs
[[money-market/boj-open-market-operations	BoJ operations]]
Interbank and large-value payments	High-value yen obligations between financial institutions.
Net positions from other systems	Net results from clearing systems (e.g. bill / cheque clearing) settle across BOJ-NET on an RTGS basis.

The securities side has a companion service, BOJ-NET JGB Services, for JGB book-entry transfers; together they enable DVP so that JGB delivery and cash payment are linked, removing principal risk in repo and outright JGB settlement.

Why RTGS, and the Liquidity Trade-off

RTGS removes settlement risk by settling each payment with finality the moment it is processed, rather than netting at day-end (which would leave large intraday exposures). The trade-off is liquidity intensity: gross settlement requires participants to have funds available throughout the day.

The BoJ manages that trade-off with two mechanisms:

Intraday overdraft facility: the BoJ provides intraday credit (against collateral) so institutions can make payments before incoming funds arrive, smoothing intraday liquidity.
Liquidity-saving features: queuing and offsetting mechanisms in BOJ-NET FTS that match opposing payments to economize on the liquidity each settlement consumes.

This is directly relevant to money-market timing: a tight intraday position can drive end-of-day call-market activity as institutions square their BoJ current-account balances.

Next-Generation RTGS (RTGS-XG)

The BoJ progressively moved Japan to RTGS and then enhanced it under the next-generation RTGS (RTGS-XG) project:

Introduced liquidity-saving features into BOJ-NET FTS.
Brought large-value payments previously handled by the private-sector Zengin Data Telecommunication System and the Foreign Exchange Yen Clearing System into the BOJ-NET FTS RTGS environment.

The effect was to concentrate systemically important large-value yen settlement on the central-bank RTGS rail with built-in liquidity economization — strengthening settlement safety while controlling the liquidity cost of gross settlement.

Current Accounts: Plumbing Meets Price

BoJ current accounts do double duty, and conflating the two roles is a common error:

Role	Meaning
Settlement asset	The balance used to settle payments over BOJ-NET FTS.
Reserve / policy balance	The same balances are reserves; under the [[money-market/boj-post-2024-floor-system-complementary-deposit-facility

So the settlement system (BOJ-NET) and the rate floor (interest on reserves) operate on the same account balances. A bank deciding whether to lend in the call market, hold reserves, or fund via repo is optimizing across settlement need, the reserve rate, and market funding cost simultaneously.

Reading Checklist

Treat BOJ-NET FTS as the cash-settlement rail and BOJ-NET JGB Services as the securities rail; together they give DVP.
Remember RTGS means gross, immediate, final settlement — not net end-of-day.
Distinguish a BoJ current account’s settlement role from its reserve / policy role; they share one balance.
Read intraday-liquidity tightness as a driver of end-of-day call-market activity, not a standalone signal.
For large-value yen settlement, recall RTGS-XG concentrated previously private-sector flows onto BOJ-NET FTS.

JapanFG Relevance

BoJ Payment and Settlement Systems Department operates and oversees BOJ-NET.
BoJ monetary policy supplies and absorbs the reserves that move across the rail and sets the reserve-rate floor.
BoJ Financial Markets Department conducts the market operations whose cash settles here.
Megabanks mufg, smfg, and mizuho-fg are direct current-account holders settling their own and clients’ large-value yen flows.
tokyo-tanshi, central-tanshi, and ueda-yagi-tanshi intermediate the call and repo trades whose cash legs settle across BOJ-NET.

Boundary Cases

BOJ-NET FTS vs BOJ-NET JGB Services: cash-transfer rail vs JGB book-entry rail; both are needed for DVP repo / JGB settlement.
RTGS vs net settlement: BOJ-NET settles gross and immediately; private retail systems net before their net positions settle across BOJ-NET.
Current account vs reserves: same balance, two roles (settlement asset and policy / reserve balance).
BOJ-NET vs Zengin: the Zengin Data Telecommunication System is the private-sector domestic funds-transfer network; large-value flows were brought onto BOJ-NET FTS under RTGS-XG, but Zengin remains the retail / mass-payment layer.

Sources

Bank of Japan: Outline of Payment and Settlement Systems (BoJ current accounts, BOJ-NET, settlement roles).
Bank of Japan: RTGS (Real-Time Gross Settlement) page (RTGS as sole settlement mode, intraday overdraft, liquidity-saving features).
Bank of Japan: The BOJ-NET Funds Transfer System overview (RTGS-XG, scope of payments brought onto BOJ-NET FTS).
Bank of Japan: Money Market overview surface.
BIS CPMI: Payment systems in Japan (BOJ-NET, RTGS, current-account settlement context).