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Thursday November 18, 9:24 pm Eastern Time

BOJ outright TB buying aims to raise Y2K liquidity

TOKYO, Nov 19 (Reuters) - The Bank of Japan (BOJ) conducted its first outright Treasury bill buying operation on Friday morning to help boost liquidity in the money market towards the year-end, a BOJ official said. "We offered the new operation today as we had completed preparations for it. This (fund-injecting operation) was also aimed at supplying ample liquidity to the market to meet extra fund demand covering the year-end," the BOJ official said.

``The new operation is one of the tools supplying short-term liquidity to the market,'' he added. Worries about the Y2K computer bug are expected to increase fund demand towards the year end.

The BOJ offered on Friday morning to buy 200 billion yen in Treasury bills outright on November 25.

The central bank announced the introduction of outright purchase or sales of short-term government securities -- Treasury bills and financing bills -- on October 13, in addition to current sales and purchases with repurchase/resale agreements.

At the same time, the BOJ announced ways to cope with possible liquidity shortages stemming from the millennium computer bug problem.

The bank said it would fully effect counter-Y2K operations ``not only utilising government securities but also private corporate debt obligations.''

-- (watching@the.trends), November 20, 1999

Answers

Woe!

Whoa!

BOJ buys T-Bills - article does not say if the T-Bills are US Dollar or Japenese yen. If they are Japanese T-Bills it would be the same as a bank issuing a loan to itself and buying it back with its' own money - all for liquidity to put some paper yen in the citizens' hands. This is printing press monetary policy at its' worst. Look out hyper-inflation that paper may have less value soon.

Got goods?

-- Bill P (porterwn@one.net), November 20, 1999.

Well T-bills are denominated in $, so they have to go through the foreign exchange markets to purchase the $. The net effect is the same. There are more yen out there, which is the increase in "liquidity" they mention. This is the equivalent of 2.1 to 2.3 billion dollars. It's not enormous by any stretch, but at least they are taking the issue seriously. It could mean more inflation for them down the road, especially with oil going up.

-- nothere nothere (notherethere@hotmail.com), November 21, 1999.