The Bank of Japan confirmed Tuesday that it will introduce a real-time gross settlements system Thursday as scheduled as all preparations for the changeover are on track.
The new system will settle all transactions among financial institutions using their current accounts with the BOJ on a real-time basis, rather than the traditional system of settling them in bulk at an arranged time.
Many industrialized countries have already completed their conversion to an RTGS system, which reduces adverse risks when a financial institution goes under, and calls have been mounting for Japan to follow suit given recent financial deregulation steps.
The central bank had been checking to see whether the roughly 500 institutions that use its online system had completed preparations for the change. It had also been testing its own systems and conducting online connection tests with financial firms.
Bank officials said Tuesday they have confirmed that the preparations have been completed and that the transfer will proceed Thursday as planned.
Some observers say that since banks will have to keep a huge amount of funds on hand to settle transactions under the new system, the shift to a RTGS system may lead to a decline in the value of deals that require settlements.