of the Foreign Exchange and Foreign Trade Control Law
of International Trade and Industry
|£±¡¥ Why is the Foreign
Exchange and Foreign Trade Control Law to be Amended?
- (1) To ensure that
the Japanese financial market becomes an international
market that is free and competitive to the same degree as
the New York and London markets, a reform of the entire
financial system is being carried out. (Japanese version
of "Big Bang")
- (2) The amendment
of the Foreign Exchange and Foreign Trade Control Law is
the "front-runner" to the reform of the
|£²¡¥ Principal Elements of the
Amendment of the Foreign Exchange and Foreign Trade
Liberalization of domestic and cross-border foreign
abolition of the system of prior permission and
notification for foreign exchange transactions
not conducted through the banks (authorized
- ¡Ý Examples of
transactions for which permission has previously
been required: ¡Ý
- ¡û The opening of
deposit accounts with overseas financial
institutions to settle payments for exports and
- ¡û The making of
loans, investments and debt guarantees, to
- ¡û The netting of
foreign-currency-denominated claims and
obligations with overseas entities.
- ¡û The trading of
foreign currencies and making of foreign-currency
futures contracts with any entity. etc.
- (2) Complete
liberalization of foreign exchange business
- The system
of authorized foreign exchange banks and the
money-exchanger system, which originated at the
time when foreign currency was very precious, and
has remained an important channel for foreign
exchange control, will be abolished.
Establishment of ex-post facto reporting system
- For such
purposes as the compilation of balance of
payments statistics, anex-post facto reporting
system for domestic and overseas capital
transactions will be established.
- (1) Transactions
such as those illustrated in item 2.(1) above will be
able to be conducted without permission, thereby reducing
labor and cost.
- (2) Foreign
exchange commissions will be reduced.
- (3) As illustrated
above, the reform of the foreign exchange system will
help to reduce the cost of overseas business for the
industrial sector, and to maintain international
competitiveness. At the same time, by bringing about an
increase in financial transactions, it should contribute
to making the financial market much sophisticate in
quality and quantity.
Average Daily Trading Volume on the World's Major foreign Exchange Markets (Unit:US$
- Source: Bank for
International Settlements (BIS), Central Bank Survey of
Foreign and Derivatives Market Activity (Triennial).
Ratio to GDP of Financial and Insurance Service Business in Japan, the United States, and the
United Kingdom (Unit:%)
- Source: Economic
Planning Agency, Annual Report on National Accounts, and
- ¡ö Figure for 1993.